AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.
September 27, 1989
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS................................................................................ Page
Adjusted Capital Account......................................................................... 1
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Adjusted Property................................................................................ 1
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Affiliate........................................................................................ 1
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Agreed Allocation................................................................................ 1
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Agreed Value..................................................................................... 1
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Agreement........................................................................................ 2
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Assignment of Leases............................................................................. 2
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Available Cash................................................................................... 2
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Book-Tax Disparity............................................................................... 2
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Business Day..................................................................................... 2
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Capital Account.................................................................................. 2
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Capital Asset.................................................................................... 2
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Capital Contribution............................................................................. 2
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Carrying Value................................................................................... 2
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Certificate of Limited Partnership............................................................... 2
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Closing Date..................................................................................... 2
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Code............................................................................................. 2
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Combined Interest................................................................................ 3
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Contributed Property............................................................................. 3
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Contributing Partner............................................................................. 3
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Contribution Agreement........................................................................... 3
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Curative Allocation.............................................................................. 3
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Delaware Act..................................................................................... 3
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Departing Partner................................................................................ 3
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Economic Risk of Loss............................................................................ 3
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General Partner.................................................................................. 3
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Indemnitee....................................................................................... 3
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Independent Committee............................................................................ 3
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Initial Offering................................................................................. 3
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Initial Offering Price........................................................................... 3
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Interim Capital Transactions..................................................................... 3
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Investor Partnership............................................................................. 3
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Investor Partnership Agreement................................................................... 3
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Kaneb............................................................................................ 3
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KPL.............................................................................................. 3
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Limited Partner.................................................................................. 4
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Liquidating Trustee.............................................................................. 4
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LP Unit.......................................................................................... 4
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Minimum Gain Attributable to Partner Nonrecourse Debt............................................ 4
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Net Agreed Value................................................................................. 4
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Net Loss......................................................................................... 4
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Net Termination Sales Gain....................................................................... 4
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Net Termination Sales Loss....................................................................... 4
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Nonrecourse Built-in Gain........................................................................ 4
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Nonrecourse Deductions........................................................................... 5
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Nonrecourse Liability............................................................................ 5
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Opinion of Counsel............................................................................... 5
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Organizational Limited Partner................................................................... 5
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Partner.......................................................................................... 5
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Partner Nonrecourse Debt......................................................................... 5
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Partner Nonrecourse Deductions................................................................... 5
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Partnership...................................................................................... 5
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Partnership Assets............................................................................... 5
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Partnership Interest............................................................................. 5
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Partnership Minimum Gain......................................................................... 5
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Partnership Year................................................................................. 5
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Partnership's Accountants........................................................................ 5
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Percentage Interest.............................................................................. 5
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Person........................................................................................... 5
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Pipeline System.................................................................................. 5
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Recapture Income................................................................................. 5
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Recaptured Credits............................................................................... 6
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Reconstituted Partnership........................................................................ 6
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Registration Statement........................................................................... 6
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Required Allocation.............................................................................. 6
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Residual Gain.................................................................................... 6
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Residual Loss.................................................................................... 6
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Section 754 Election............................................................................. 6
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Securities Act................................................................................... 6
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Special Approval................................................................................. 6
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Substituted Limited Partner...................................................................... 6
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Terminating Capital Transactions................................................................. 6
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Unrealized Gain.................................................................................. 6
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Unrealized Loss.................................................................................. 6
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ARTICLE 2 FORMATION OF PARTNERSHIP................................................................... 6
2.1 Formation and Continuation.............................................................. 6
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2.2 Name.................................................................................... 6
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2.3 Names and Addresses of Partners......................................................... 7
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2.4 Principal Office of the Partnership: Registered Office and Agent........................ 7
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2.5 Term.................................................................................... 7
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ARTICLE 3 PURPOSE.................................................................................... 7
ARTICLE 4 CAPITAL ACCOUNTS; CAPITAL CONTRIBUTIONS.................................................... 7
4.1 Initial Contributions................................................................... 7
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4.2 Contributions on the Closing Date....................................................... 8
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4.3 Capital Accounts........................................................................ 8
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4.4 Interest................................................................................ 10
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4.5 No Withdrawal........................................................................... 10
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4.6 Loans from Partners..................................................................... 10
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4.7 Record of Contributions................................................................. 10
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ARTICLE 5 ALLOCATIONS AND DISTRIBUTIONS.............................................................. 10
5.1 Allocations for Capital Account Purposes................................................ 10
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5.2 Allocations for Tax Purposes............................................................ 13
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5.3 Requirement and Characterization of Distributions....................................... 15
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5.4 Reimbursement sand Payments............................................................. 15
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ARTICLE 6 MANAGEMENT AND OPERATION OF BUSINESS....................................................... 15
6.1 Management.............................................................................. 15
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6.2 Reliance By Third Parties............................................................... 16
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6.3 Compensation and Reimbursement of the General Partner................................... 17
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6.4 Partnership Funds....................................................................... 17
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6.5 Loans from the General Partner: Contracts with Affiliates............................... 17
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6.6 Liability of Indemnitees................................................................ 18
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6.7 Indemnification......................................................................... 18
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6.8 Other Matters Concerning the General Partner............................................ 19
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6.9 Title to Partnership Assets............................................................. 20
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6.10 Resolution of Conflicts of Interest..................................................... 20
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6.11 Restrictions on General Partner's Authority............................................. 21
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6.12 Outside Activities...................................................................... 21
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ARTICLE 7 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................................................. 22
7.1 Limitation of Liability................................................................. 22
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7.2 Management of Business.................................................................. 22
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7.3 Return of Capital....................................................................... 22
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7.4 Access to Information................................................................... 22
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ARTICLE 8 BOOKS, RECORDS, ACCOUNTING AND REPORTS..................................................... 22
8.1 Records and Accounting.................................................................. 22
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8.2 Fiscal Year............................................................................. 23
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ARTICLE 9 TAX MATTERS................................................................................ 23
9.1 Section 754 Allocations................................................................. 23
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9.2 Preparation of Tax Returns.............................................................. 23
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9.3 Tax Elections........................................................................... 23
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9.4 Tax Controversies....................................................................... 23
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9.5 Tax Basis and Value Determinations...................................................... 23
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9.6 General Partner Net Worth............................................................... 23
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ARTICLE 10 TRANSFER OF PARTNERSHIP INTERESTS.......................................................... 24
10.1 Transfer................................................................................ 24
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10.2 Transfer of Interests of the General Partner............................................ 24
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10.3 Transfer of Partnership Interests of Limited Partners................................... 24
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ARTICLE 11 ADMISSION OF PARTNERS...................................................................... 24
11.1 Admission of Substituted Limited Partners............................................... 24
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11.2 Admission of Successor or Additional General Partner.................................... 24
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ARTICLE 12 WITHDRAWAL OR REMOVAL OF THE GENERAL PARTNER............................................... 25
12.1 Withdrawal or Removal of the General Partner............................................ 25
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12.2 Withdrawal.............................................................................. 25
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12.3 Removal................................................................................. 26
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12.4 Opinion of Counsel...................................................................... 26
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12.5 Amendment of Certificate of Limited Partnership......................................... 26
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12.6 Interest of Departing Partner and Successor............................................. 26
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ARTICLE 13 DISSOLUTION AND LIQUIDATION................................................................ 27
13.1 Dissolution............................................................................. 27
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13.2 Continuation of the Business of the Partnership......................................... 27
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13.3 Liquidation............................................................................. 28
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13.4 Distribution in Kind.................................................................... 28
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13.5 Cancellation of Certificate of Limited Partnership...................................... 29
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13.6 Reasonable Time for Winding Up.......................................................... 29
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13.7 Return of Contributions................................................................. 29
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13.8 No capital Account Restoration.......................................................... 29
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13.9 Waiver of Partition..................................................................... 29
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ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT......................................................... 29
14.1 Amendments to be Adopted Solely by the General Partner.................................. 29
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14.2 Amendment Procedures.................................................................... 30
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ARTICLE 15 MERGER..................................................................................... 30
15.1 Authority............................................................................... 30
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15.2 Procedure for Merger or Consolidation................................................... 30
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15.3 Approval by Limited Partners of Merger or Consolidation................................. 31
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15.4 Certificate of Merger................................................................... 31
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15.5 Effect of Merger........................................................................ 31
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ARTICLE 16 GENERAL PROVISIONS......................................................................... 31
16.1 Addresses and Notices................................................................... 31
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16.2 Titles and Captions..................................................................... 31
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16.3 Pronouns and Plurals.................................................................... 31
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16.4 Further Action.......................................................................... 31
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16.5 Binding Effect.......................................................................... 32
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16.6 Integration............................................................................. 32
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16.7 Creditors............................................................................... 32
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16.8 Waiver.................................................................................. 32
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16.9 Counterparts............................................................................ 32
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16.10 Applicable Law.......................................................................... 32
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16.11 Invalidity of Provisions................................................................ 32
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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
KANEB PIPE LINE OPERATING PARTNERSHIP, L.P.
This Amended and Restated Agreement of Limited Partnership of Kaneb Pipe
Line Operating Partnership, L.P. (herein called this "Agreement") is entered
into by and among Kaneb Pipe Line Company, a Delaware corporation, as general
partner of the Partnership, Kaneb Services, Inc., a Delaware corporation, as the
organizational limited partner, and those other persons who become the Partners
in the Partnership as hereinafter provided.
In consideration of the mutual covenants, conditions and agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Unless clearly indicated to the contrary, the terms defined in this Article
1 shall, for the purposes of this Agreement, have the meanings herein specified.
Adjusted Capital Account: The Capital Account maintained for each Partner
as of the end of each fiscal year of the Partnership (a) increased by any
amounts which such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(II)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-1T(b)(4)(iv)(f) and
1.704-1T(b)(4)(iv)(h)(5) and (b) decreased by (i) the amount of all losses and
deductions that, as of the end of such fiscal year, are reasonably expected to
be allocated to such Partner in subsequent years under Sections 704(e)(2) and
706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii)
the amount of all distributions that, as of the end of such fiscal year, are
reasonably expected to be made to such Partner in subsequent years in accordance
with the terms of this Agreement or otherwise to the extent they exceed
offsetting increases to such Partner's Capital Account that are reasonably
expected to occur during (or prior to) the year in which such distributions are
reasonably expected to be made (other than increases pursuant to a minimum gain
charge back pursuant to Section 5.1.4.(a) and 5.1.4.(b). The foregoing
definition of Adjusted Capital Account is intended to comply with the provisions
of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
Adjusted Property: Any property the Carrying Value of which has been
adjusted pursuant to Section 4.3.4.(a) or 4.3.4.(b). Once an Adjusted Property
is deemed distributed by, and recontributed to, the Partnership for federal
income tax purposes pursuant to Section 708 of the Code, such property shall
thereafter constitute a Contributed Property until the Carrying Value of such
property is further adjusted pursuant to Section 4.3.4.(a) or 4.3.4.(b).
Affiliate: Any Person directly or indirectly controlling, controlled by or
under common control with Person in question. As used in this definition of
"Affiliate", the term "control" means the possession directly, for indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.
Agreed Allocation: Any allocation, other than a Required Allocation, of a
item of income, gain, deduction or loss pursuant to the provisions of Section
5.1, including a Curative Allocation (if appropriate to the context in which the
term "Agreed Allocation" is used).
Agreed Value: Of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt; provided, however, that the Agreed Value of any property deemed
contributed to the Partnership for federal income tax purposes upon termination
and reconstitution thereof pursuant to Section 708 of the Code shall be
determined in accordance with Section 4.3.3. Subject to Section 4.3.3, the
General Partner shall, in its sole discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate Agreed Value of Contributed
Properties contributed to the Partnership in a single or integrated transaction
among each separate property on a basis proportional to their fair market
values.
Agreement: This Amended and Restated Agreement of Limited Partnership, as
it may be amended supplemented or restated from time to time.
Assignment of Leases: Collectively, those two certain Assignment of Lease
Agreements dated __________________, 1989, among KPL, Kaneb and the Partnership.
Available Cash: With respect to any calendar quarter, means (i) the sum of
(a) all cash receipts of the Partnership during such quarter from all sources
and (b) any reduction in reserves established in prior quarters, less (ii) the
sum of (aa) all cash disbursements of the Partnership during such quarter,
including, without limitation, disbursements for operating expenses, debt
service (including the payment of principal, premium and interest), capital
expenditures and contributions, if any, to a subsidiary corporation or
partnership (but excluding all cash distributions to Partners), (bb) any
reserves established in such quarter in such amounts as the General Partner
determines in its reasonable discretion to be necessary or appropriate to
provide for the proper conduct of the business of the Partnership (including
reserves for future capital expenditures) and (cc) any other reserves
established in such quarter in such amounts as the General Partner determines in
its reasonable discretion to be necessary because the distribution of such
amounts would be prohibited by applicable law or by any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation to which
the Partnership is a party or by which it is bound or its assets are subject.
Notwithstanding the foregoing, "Available Cash" shall not include any cash
receipts or reductions in reserves or take into account any disbursements made
or reserves established after commencement of the dissolution and liquidation of
the Partnership.
Book-Tax Disparity: With respect to any item of Contributed Property or
Adjusted Property, as of the date of any determination, the difference between
the Carrying Value of such Contributed Property or Adjusted Property and the
adjusted basis thereof for federal income tax purposes as of such date. A
Partner's share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to Section
4.3 and the hypothetical balance of such Partner's Capital Account computed as
if it had been maintained strictly in accordance with federal income tax
accounting principles.
Business Day: Monday through Friday of each week, except that a legal
holiday recognized as such by the Government of the United States or the State
of New York shall not be regarded as a Business Day.
Capital Account: The Capital account maintained for a Partner pursuant to
Section 4.3.
Capital Asset: Any asset on the Partnership's balance sheet, other than
inventory, accounts receivable or any other current asset and assets disposed of
in connection with normal retirements or replacements.
Capital Contribution: Any cash, cash equivalents or the Net Agreed Value of
Contributed Property which a Partner contributes to the Partnership pursuant to
Section 4.1, 4.2, 4.3 or 12.6.2(b).
Carrying Value: (a) With respect to a Contributed Property, the Agreed
Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partner's Capital
Accounts, and (b) with respect to any other Partnership property, the adjusted
basis of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with Section 4.3.4.(a) and 4.3.4.(b), and to reflect changes,
additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Partnership Assets, as deemed appropriate by the General
Partner.
Certificate of Limited Partnership: The Certificate of Limited Partnership,
and any and all amendments thereto and restatements thereof, filed on behalf of
the Partnership as required under the Delaware Act.
Closing Date: Has the meaning set forth in the Investor Partnership
Agreement.
Code: The Internal Revenue Code of 1986, as amended and hereafter amended,
and applicable regulations thereunder. Any reference herein to a specific
section or sections of the Code or applicable regulations shall be deemed to
include a reference to any corresponding provision of future law or regulation.
Combined Interest: Has the meaning set forth in the Investor Partnership
Agreement.
Contributed Property: Each property or other asset, in such form as may be
permitted by the Delaware Act, but excluding cash and cash equivalents,
contributed to the Partnership (or deemed contributed to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code or
otherwise). Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.3.4.(a), such property shall no longer constitute a
Contributed Property but shall be deemed an Adjusted Property for such purposes.
Contributing Partner: Any Partner contributing (or deemed to have
contributed on the termination and reconstitution of the Partnership pursuant to
Section 708 of the Code or otherwise) Contributed Property to the Partnership.
Contribution Agreement: That certain Contribution Agreement dated
____________, 1989 among KPL, the Partnership, the Investor Partnership and
Kaneb wherein KPL agrees (i) to contribute to the Partnership certain designated
assets and the Partnership agrees to assume certain designated liabilities and
(ii) to contribute its limited partner interest in the Partnership to the
Investor Partnership in exchange for LP Units.
Curative Allocation: Any allocation of an item of income, gain, deduction,
loss or credit pursuant to the provisions of Section 5.1.4.(i).
Delaware Act: The Delaware Revised Uniform Limited Partnership Act (6 Del.
C.ss.17-101, et seq.), as it may be amended from time to time, and any successor
to such statute.
Departing Partner: A former General Partner, as of the effective date of
any withdrawal or removal of such General Partner pursuant to Section 12.1.
Economic Risk of Loss: Has the meaning set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(k)(1).
General Partner: KPL or any successor or additional General Partner
admitted pursuant to Section 11.2
Indemnitee: The General Partner, any Departing Partner, any Person who is
or was an Affiliate of the General Partner or any Departing Partner, any person
who is or was an officer, director, employee, partner, agent or trustee of the
General Partner or any Departing Partner or any Affiliate of the General Partner
or Departing Partner, or any Person who is or was serving at the request of the
General Partner or any Departing Partner or any Affiliate of the General Partner
or the Departing Partner as a director, officer, employee, partner, agent or
trustee of another Person.
Independent Committee: A committee of the Board of Directors of the General
Partner composed entirely of directors who are neither officers nor employees of
Kaneb, the General Partner or any of their Affiliates.
Initial Offering: Has the meaning set forth in the Investor Partnership
Agreement.
Initial Offering Price: Has the meaning set forth in the Investor
Partnership Agreement.
Interim Capital Transactions: Has the meaning set forth in the Investor
Partnership Agreement.
Investor Partnership: Kaneb Pipe Line Partners, L.P., a Delaware limited
partnership established pursuant to the Investor Partnership Agreement.
Investor Partnership Agreement: The Amended and Restated Agreement of
Limited Partnership of the Investor Partnership as it may be amended,
supplemented or restated from time to time.
Kaneb: Kaneb Services, Inc., a Delaware corporation.
KPL: Kaneb Pipe Line Company, a Delaware corporation.
Limited Partner: The Organizational Limited Partner and each Substituted
Limited Partner.
Liquidating Trustee: The General Partner, unless dissolution was caused by
an event described in Section 13.1.2, then the liquidator or liquidating
committee chosen pursuant to Section 13.3.
LP Unit: Has the meaning set forth in the Investor Partnership Agreement.
Minimum Gain Attributable to Partner Nonrecourse Debt: That amount
determined in accordance with the principles of Treasury Regulation Section
1.704-1T(b)(4)(iv)(h)(6).
Net Agreed Value: Means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
at the time such property is distributed, reduced by any indebtedness either
assumed by such Partner or Assignee upon such distribution or to which such
property is subject at the time of distribution, in either case, as determined
under Section 752 of the Code.
Net Income: For any taxable period, the excess, if any, of the
Partnership's items of income and gain (other than those items attributable to
dispositions constituting Terminating Capital Transactions) for such taxable
period over the Partnership's items of loss and deduction (other than those
items attributable to dispositions constituting Terminating Capital
Transactions) for such taxable period. The items included in the calculation of
Net Income shall be determined in accordance with Section 4.3.2 and shall not
include any items specially allocated under Section 5.1.4. Once an item of
income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to a Required Allocation or a Curative
Allocation, Net Income or the resulting Net Loss, whichever the case may be,
shall be recomputed without regard to such item.
Net Loss: For any taxable period, the excess, if any, of the Partnership's
items of loss and deduction (other than those items attributable to dispositions
constituting Terminating Capital Transactions) for such taxable period over the
Partnership's items of income and gain (other than those items attributable to
dispositions constituting Terminating Capital Transactions) for such taxable
period. The items included in the calculation of Net Loss shall be determined in
accordance with Section 4.3.2 and shall not include any items specially
allocated under Section 5.1.4. Once an item of income, gain, loss or deduction
that has been included in the initial computation of Net Loss is subjected to a
Required Allocation or a Curative Allocation, Net Loss or the resulting Net
Income, whichever the case may be, shall be recomputed without regard to such
item.
Net Termination Sales Gain: Means, for each Partnership Year or shorter
period, the sum, if positive, of all items of gain or loss recognized by the
Partnership from Terminating Capital Transactions occurring in such Partnership
Year or shorter period. The items included in the determination of Net
Termination Sales Gain shall be determined in accordance with Section 4.3.2 and
shall not include any items of income, gain or loss specially allocated under
Section 5.1.4. Once an item of income, gain or loss that has been included in
the initial computation of Net Termination Sales Gain is subjected to a Required
Allocation or a Curative Allocation, Net Termination Sales Gain or the resulting
Net Termination Sales Loss, whichever the case may be, shall be recomputed
without regard to such item.
Net Termination Sales Loss: Means, for each Partnership Year or shorter
period, the sum, if negative, of all items of gain or loss recognized by the
Partnership from Terminating Capital Transactions occurring in such Partnership
Year or shorter period. The items included in the determination of Net
Termination Sales Loss shall be determined in accordance with Section 4.3.2 and
shall not include any items of income, gain or loss specially allocated under
Section 5.1.4. Once an item of gain or loss that has been included in the
initial computation of Net Termination Sales Loss is subjected to a Required
Allocation or a Curative Allocation, Net Termination Sales Loss or the resulting
Net Termination Sales Gain, whichever the case may be, shall be recomputed
without regard to such item.
Nonrecourse Built-in Gain: With respect to any Contributed Properties or
Adjusted Properties that are subject to a mortgage or negative pledge securing a
Nonrecourse Liability, the amount of any taxable gain that would be allocated to
the Partners pursuant to Sections 5.2.2.(a)(A), 5.2.2.(b)(A) or 5.2.2.(d) if
such properties were disposed of in a taxable transaction in full satisfaction
of such liabilities and or no other consideration.
Nonrecourse Deductions: Any and all items of loss, deduction or expenditure
(described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-1T(b)(4)(iv)(b), are
attributable to a Nonrecourse Liability.
Nonrecourse Liability: Has the meaning set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(k)(3).
Opinion of Counsel: A written opinion of counsel (who may be regular
counsel to the Partnership or the General Partner) acceptable to the General
Partner.
Organizational Limited Partner: The investor Partnership.
Partner: A General Partner or a Limited Partner.
Partner Nonrecourse Debt: Has the meaning set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(k)(4).
Partner Nonrecourse Deductions: Any and all items of loss, deduction or
expenditure (described in Section 705(a)(2)(B) of the Code) that in accordance
with the principles of Treasury Regulation Section 1.704-1T(b)(4)(iv)(h)(3), are
attributable to a Partner Nonrecourse Debt.
Partnership: The Limited partnership heretofore formed and continued
pursuant to this Agreement, and any successor thereto.
Partnership Assets: All assets, whether tangible or intangible and whether
real, personal or mixed, at any time owned by the Partnership.
Partnership Interest: As to any Partner, all of the interests of that
Partner in the Partnership including, without limitation, his (i) right to
distributive share of the profits and losses of the Partnership (ii) right to
distributive share of Partnership Assets and (iii) rights, of the General
Partner, to participate in the management of the affairs of the Partnership.
Partnership Minimum Gain: That amount determined in accordance with the
principles of Treasury Regulation Sections 1.704-1T(b)(4)(iv)(a) and
1.704-1T(b)(4)(iv)(c).
Partnership Year: Means the fiscal year of the Partnership, which shall be
the calendar year.
Partnership's Accountants: Such nationally recognized firm of independent
public accountants as is selected, from time to time, by the General Partner.
Percentage Interest: Means, as of the date of determination, (a) as to the
General Partner in its capacity as such, 1% and (b) as to the Limited Partners,
an aggregate of 99%.
Person: Any individual, corporation, association, partnership, joint
venture, trust, estate or other entity or organization.
Pipeline System: Shall mean the refined petroleum products pipeline assets
and related terminal facilities that will be transferred to the Partnership by
KPL on the Closing Date, as such facilities may be maintained or improved from
time to time.
Recapture Income: Any gain recognized by the Partnership (computed without
regard to any adjustment required by Sections 734 or 743 of the Code) upon the
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
Recaptured Credits: Credits previously taken against federal income tax
liability which are required to be recaptured upon the disposition of any
property by the Partnership prior to the end of such property's useful life in
determining the amount of the credit relating thereto.
Reconstituted Partnership: The new limited partnership formed in the manner
described in Section 13.2.
Registration Statement: Has the meaning set forth in the Investor
Partnership Agreement.
Required Allocation: Any allocation (or limitation imposed on any
allocation) of an item of income, gain, deduction or loss pursuant to (a) the
proviso-clause of Section 5.1.2.(b) and Sections 5.1.4.(a), 5.1.4.(b),
5.1.4.(c), 5.1.4.(d), 5.1.4.(e), 5.1.4.(f), and 5.1.4.(h), such allocations (or
limitations thereon) being directly or indirectly required by the Treasury
Regulations promulgated under Section 704(b) of the Code.
Residual Gain or Residual Loss: Any item of gain or loss, as the case may
be, of the Partnership recognized for federal income tax purposes resulting from
a sale, exchange or other disposition of a Contributed Property or Adjusted
Property, to the extent such item of gain or loss is not allocated pursuant to
Sections 5.2.2.(a)(A) or 5.2.2.(b)(A) to eliminate Book-Tax Disparities.
Section 754 Election: An election under Section 754 of the Code relating to
the adjustment of the adjusted basis of Partnership Assets as provided in
Sections 734 and 743 of the Code.
Securities Act: The Securities Act of 1933, as amended, and any successor
to such statute.
Special Approval: Approval by a majority of the members of the Board of
Directors of the General Partner that includes approval by a majority of the
members of the Independent Committee.
Substituted Limited Partner: A Person who is admitted as a Limited Partner
in the Partnership pursuant to Section 11.1 and will all the rights of a Limited
Partner and who is shown as a Limited Partner on the books and records of the
Partnership.
Terminating Capital Transactions: Has the meaning set forth in the Investor
Partnership Agreement.
Unrealized Gain: Attributable to a Partnership property means, as of any
date of determination, the excess, if any, of the fair market value of such
property as of such date of determination over the Carrying Value of such
property as of such date of determination (prior to any adjustment to be made
pursuant to Section 4.3.4 as of such date).
Unrealized Loss: Attributable to a Partnership property means, as of any
date of determination, the excess, if any, of the Carrying Value of such
property as of such date of determination (prior to any adjustment to be made
pursuant to Section 4.3.4 as of such date) over the fair market value of such
property as of such date of determination.
ARTICLE 2
FORMATION OF PARTNERSHIP
2.1 Formation and Continuation. The General Partner and the Organizational
Limited Partner have previously formed the Partnership as a limited partnership
pursuant to the provisions of the Delaware Act and hereby amend and restate the
original Agreement of Limited Partnership in its entirety. Subject to the
provisions of this Agreement, the General Partner and the Organizational Limited
Partner hereby continue the Partnership as a limited partnership pursuant to the
provisions of the Delaware Act. Except as expressly provided herein to the
contrary, the rights and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the Delaware
Act. The Partnership interest of each Partner shall be personal property for all
purposes.
2.2 Name. The name of the Partnership shall be "Kaneb Pipe Line Operating
Partnership, L.P." The business of the Partnership shall be conducted under the
name of "Kaneb Pipe Line Operating Partnership, L.P." or such other name,
including the name of the General Partner or any Affiliate, as the General
Partner may from time to time determine. The words "L.P." or "Limited
Partnership" or similar words or letters shall be included in the Partnership's
name where necessary for the purpose of complying with the laws of any
jurisdiction that so requires. The General Partner in its sole discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
Limited Partners. Notwithstanding the foregoing, unless otherwise permitted by
Kaneb, in the event that neither KPL nor any Affiliate of Kaneb is the general
partner of the Partnership, the Partnership shall change its name to a name not
including "Kaneb" and shall cease using the name "Kaneb" or other names or
symbols associated therewith.
2.3. Names and Addresses of Partners. The General Partner of the
Partnership is KPL. The business address of the General Partner is ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The General Partner may change its address
at any time and from time to time. The date upon which the General Partner
became a Partner in the Partnership is as set forth in the books and records of
the Partnership. The names and business, residence or mailing addresses of the
Limited Partners and the date on which each such Person became a Limited Partner
are as set forth from time to time in the books and records of the Partnership.
2.4. Principal Office of the Partnership; Registered Office and Agent. The
principal office of the Partnership shall be located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. The General Partner may, at any time and from time to
time, change the location of the Partnership's principal office and may
establish such additional offices of the Partnership as the General Partner may
from time to time determine. The General Partner shall provide the Limited
Partners with written notice of any change in the Partnership's principal office
within 90 days after such change. The name of the registered agent for service
of process on the Partnership in Delaware is The Corporation Trust Company. The
address of the registered agent and the address of the registered office of the
Partnership in Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2.5. Term. The Partnership commenced upon the filing of the Certificate of
Limited Partnership in accordance with the Delaware Act on September _____,
1989, and shall continue in existence until December 31, 2039, unless earlier
terminated in accordance with any provisions of this Agreement.
ARTICLE 3
PURPOSE
The purpose and nature of the business to be conducted by the Partnership
shall be (i) to engage in the common carrier transportation of refined petroleum
products and related activities through ownership of the Pipeline System and, in
connection therewith, to operate, maintain and improve the Pipeline System, (ii)
to conduct any other business that may be lawfully conducted by a limited
partnership organized pursuant to the Delaware Act and (iii) to do anything
necessary or incidental to the foregoing. The General Partner has no obligation
or duty to the Partnership or the Limited Partners to propose or approve, and in
its sole discretion may decline to propose or approve, the conduct by the
Partnership pursuant to clause (ii) above of any business other than as
contemplated by clause (i) above. The Partnership shall be empowered to do any
and all acts and things necessary, appropriate, proper, advisable, incidental to
or convenient for the furtherance and accomplishment of the purposes and
business described herein and for the protection and benefit of the Partnership.
ARTICLE 4
CAPITAL ACCOUNTS; CAPITAL CONTRIBUTIONS
4.1. Initial Contributions. The initial Capital Contributions to the
Partnership consisted of $1,000, which the Partners contributed to the
Partnership upon the formation of the Partnership. The General Partner
contributed $10 in cash and received in exchange therefor a 1.0% Partnership
interest as General Partner and the Organizational Limited Partner contributed
$990 in cash and received in exchange therefor a 99% Partnership interest as
Limited Partner in the Partnership.
4.2. Contributions on the Closing Date.
4.2.1. On the Closing Date, KPL shall contribute to the Partnership,
as provided in the Contribution Agreement, the property and other
considerations described in the Contribution Agreement as being so
contributed and shall receive an exchange therefor (i) a Partnership
Interest as a Limited Partner equal to the percentage obtained by
multiplying .99 by the quotient of (A) the Net Agreed Value of KPL's
Capital Contribution as a Limited Partner (as provided below) divided by
(B) such amount plus $990, and (ii) a Partnership interest and a credit to
its capital account as General Partner in the amount required to increase
such capital account to an amount equal to 1% of the aggregate capital
accounts of all the Partners after giving effect to the issuance of
Partnership Interests contemplated by clause (i) of this Section 4.2.1.
4.2.2. The Net Agreed Value of KPL's Capital Contribution pursuant to
Section 4.2.1 shall be an amount equal to the Initial Offering Price of one
Senior Preference Unit times 13,950,918. Of such Net Agreed Value, (i) the
amount deemed contributed as General Partner shall be the amount required
to increase the General Partner's Capital Account as General Partner to an
amount equal to 1% of the aggregate Capital Accounts of all the Partners
after giving effect to the issuance of Partnership interests contemplated
by clause (i) of Section 4.2.1 and (ii) the balance of such Net Agreed
Value shall be deemed to be contributed as a Limited Partner.
4.3. Capital Accounts.
4.3.1. The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by the (i) the
amount of all Capital Contributions made by such Partner to the Partnership
pursuant to this Agreement and (ii) all items of Partnership income and
gain (including income and gain exempt from tax) computed in accordance
with Section 4.3.2 and allocated to such Partner pursuant to Article 5, and
decreased by (x) the amount of cash or Net Agreed Value of all actual and
deemed distributions of cash or property made to such Partner pursuant to
this Agreement and (y) all items of Partnership deduction and loss computed
in accordance with Section 4.3.2 and allocated to such Partner pursuant to
Section 5.1. In addition, any payment by the General Partner of rent with
respect to the leases subject to the Assignment of Leases shall be treated
as a Capital Contribution by the General Partner.
4.3.2. For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Partners' Capital Accounts,
the determination, recognition and classification of any such item shall be
the same as its determination, recognition and classification for federal
income tax purposes (including any method of depreciation, cost recovery or
amortization used for that purpose, provided that:
(a) All fees and other expenses incurred by the Partnership to
promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
5.1.
(b) Except as otherwise provided in Treasury Regulation Section
1.704-1 (b)(2)(iv)(m), the computation of all items of income, gain,
loss and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Partnership and, as
to those items described in Section 705(a)(1)(B) or 705 (a)(2)(B) of
the Code, without regard to the fact that such items are not
includable in gross income or are neither currently deductible nor
capitalized for federal income tax purposes. To the extent an
adjustment to the adjusted tax basis of any Partnership Asset pursuant
to Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset).
(c) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(d) In accordance with the requirements of Section 704(b) of the
Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the
adjusted basis of such property, on the date it was acquired by the
Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 4.3.4 to the Carrying Value of any
Partnership property subject to depreciation, cost recovery or
amortization, any further deductions for such depreciation, cost
recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to
the Carrying Value of such property immediately following such
adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for federal
income tax purposes; provided, however, that, if the asset has a zero
adjusted basis for federal income tax purposes, depreciation, cost
recovery or amortization deductions shall be determined using any
reasonable method that the General Partner may adopt.
(e) If the Partnership's adjusted basis in depreciable or cost
recovery property is reduced for federal income tax purposes pursuant
to Section 48(q)(1) or 48(q)(3) of the Code, the amount of such
reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the
Partners pursuant to Section 5.1. Any restoration of such basis
pursuant to Section 48(q)(2) of the Code shall, to the extent
possible, be allocated in the same manner to the Partners to whom such
deemed deduction was allocated.
4.3.3. Generally, a transferee of a Partnership Interest shall succeed
to that portion of the Capital Account of the Transferor relating to the
Partnership Interest so transferred; provided, however, that, if the
transfer causes a termination of the Partnership under Section 708(b)(1)(B)
of the Code, the Partnership's properties shall be deemed to have been
distributed in liquidation of the Partnership to the Partners and
recontributed by such Partners in reconstitution of the Partnership. In
such event, the Carrying Values of the Partnership properties shall be
adjusted immediately prior to such deemed distribution pursuant to Section
4.3.4.(b) and such Carrying Values shall then constitute the Agreed Values
of such properties. The Capital Accounts of such reconstituted Partnership
shall be maintained in accordance with the principles of this Section 4.3.
4.3.4. (a) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Partnership
Interests for cash or Contributed Property, the Capital Accounts of
all Partners and the Carrying Value of each Partnership property
immediately prior to such issuance shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain
or Unrealized Loss had been recognized on an actual sale of each such
Partnership property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to Section 5.1. In
determining Unrealized Gain or Unrealized Loss for purposes of this
Section 4.3.4(a) the aggregate cash amount and fair market value of
all Partnership assets (including cash or cash equivalents)
immediately prior to the issuance of Partnership Interests shall be
determined by the General Partner using such reasonable method of
valuation as it may adopt. The General Partner shall allocate such
aggregate value among the assets of the Partnership (in such manner as
it determines in its sole discretion to be reasonable) to arrive at a
fair market value for individual properties.
(b) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than cash
or cash equivalents), the Capital Accounts of all Partners and the
Carrying Value of each Partnership property shall, immediately prior
to any such distribution, be adjusted upward or downward to reflect
any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss
had been recognized in a sale of such property immediately prior to
such distribution for an amount equal to its fair market value, and
had been allocated to the Partners, at such time, pursuant to Section
5.1. Any Unrealized Gain or Unrealized Loss attributable to such
property shall be allocated in the same manner as Net Termination
Sales Gain or Net Termination Sales Loss pursuant to Section 5.1.3;
provided, however, that in making any such allocation, Net Termination
Sales Gain or Net Termination Sales Loss actually realized shall be
allocated first. In determining Unrealized Gain or Unrealized Loss for
purposes of this Section 4.3.4.(b), the aggregate cash amount and fair
market values of all Partnership assets (including cash or cash
equivalents) immediately prior to a distribution shall be determined
and allocated by the Liquidator using such reasonable methods of
valuation as it may adopt.
4.4. Interest. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
4.5. No Withdrawal. No Partner shall be entitled to withdraw any part of
his Capital Contribution or his Capital Account or to receive any distribution
from the Partnership, except as provided in Articles 5, 12 and 13.
4.6. Loans from Partners. Loans by a Partner to the Partnership shall not
constitute Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be contributed by it
to the capital of the Partnership, the making of such excess advances shall not
result in any increase in the amount of the Capital Account of such Partner. The
amount of any such excess advances shall be a debt obligation of the Partnership
to such Partner and shall be payable or collectible only out of the Partnership
Assets in accordance with the terms and conditions upon which such advances are
made.
4.7. Record of Contributions. The books and records of the Partnership
shall include true and full information regarding the amount of cash and cash
equivalents and a designation and statement of the Net Value of any other
property contributed by each Partner to the Partnership.
ARTICLE 5
ALLOCATIONS AND DISTRIBUTIONS
5.1. Allocations for Capital Account Purposes. For purposes of maintaining
the Capital Accounts and in determining the rights of the Partners among
themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.3.2) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided herein below.
5.1.1. Net Income. After giving effect to the special allocations set
forth in Section 5.1.4, all items of income, gain, loss and deduction taken
into account in computing Net Income for such taxable period shall be
allocated in the same manner as such Net Income is allocated hereunder.
(a) First, 100% to the General Partner until aggregate Net Income
allocated to the General Partner pursuant to this Section 5.1.1.(a)
for the current taxable year and all previous taxable years is equal
to the aggregate Net Loses allocated to the General Partner pursuant
to Section 5.1.2.(c) for all previous taxable years;
(b) Second, 100% to the Limited Partners and the General Partner,
in accordance with their respective Percentage Interests, until the
aggregate Net Income allocated to the Limited Partners and the General
Partner pursuant to this Section 5.1.1.(b) for the current taxable
year and all previous taxable years is equal to the aggregate Net
Losses allocated to the Limited Partners and the General Partner
pursuant to Section 5.1.2.(b) for all previous taxable years; and
(c) Third, the balance, if any shall be allocated among the
Partners in accordance with their respective Percentage Interests.
5.1.2. Net Loss. After giving effect to the special allocations set
forth in Section 5.1.4, all items of income, gain, loss and deduction taken
into account in computing Net Loss for such taxable period shall be
allocated in the same manner as such Net Loss is allocated hereunder:
(a) First, 100% to the General Partner and the Limited Partners,
until the aggregate Net Losses allocated pursuant to this Section
5.1.2(a) for the current taxable year and all previous taxable years
is equal to the aggregate Net Income allocated to such Partners
pursuant to Section 5.1.1.(c) for all previous taxable years.
(b) Second, 100% to the Limited Partners and the General Partner,
in accordance with their respective Percentage Interests; provided,
that Net Loss shall not be allocated pursuant to this Section 5.1.2(b)
to the extent that such allocation would cause any Limited Partner to
have a deficit balance in its adjusted Capital Account at the end of
such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account);
(c) Third, the balance, if any, 100% to the General Partner.
5.1.3. Net Termination Gains and Losses. After giving effect to the
special allocations set forth in Section 5.1.4, all items of gain and loss
taken into account in computing Net Termination Sales Gain or Net
Termination Sales Loss for such taxable period shall be allocated in the
same manner as such Net Termination Sales Gain or Net Termination Sales
Loss is allocated hereunder. All allocations under this Section 5.1.3 shall
be made after Capital Account balances have been adjusted by all other
allocations provided under this Section 5.1 and after all distributions of
Available Cash have been made with respect to the taxable period ending on
the liquidation date.
(a) If a Net Termination Sales Gain is recognized (or deemed
recognized pursuant to Section 4.3.4) such Net Termination Sales Gain
shall be allocated between the General Partner and the Limited
Partners in the following manner:
First, to each Partner having a deficit balance in such
Partner's Capital Account to the extend of and in proportion to
such deficit balance; and
Second, 100% to the General Partner and the Limited Partners
in accordance with their respective Percentage Interests.
(b) If a Net Termination Sales Loss is recognized (or deemed
recognized pursuant to Section 4.3.4), such Net Termination Sales Loss
shall be allocated to the Partners in the following manner:
(i) First, 100% to the General Partner and the Limited
Partners in proportion to, and to the extent of, the positive
balances in their respective Capital Accounts; and
(ii) Second, the balance, if any, 100% to the General
Partner.
5.1.4. Special Allocations. Notwithstanding any other provision of
this Section 5.1, the following special allocations shall be made for such
taxable period:
(a) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in proportion to,
and to the extend of, an amount equal to the greater of (A) the
portion of such Partner's share of the net decrease in Partnership
Minimum Gain during such taxable period that is allocable (in
accordance with the principles set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(e)(2)) to the disposition of Partnership
property subject to one or more Nonrecourse Liabilities of the
Partnership, or (B) the deficit balance in such Partner's Adjusted
Capital Account at the end of such taxable period (modified as
appropriate, by Treasury Regulation Section 1.704T(b)(4)(iv)(e)(2)).
The items to be so allocated shall be determined in accordance with
Treasury Regulation Section 1.704-1T(b)(4)(iv)(e) and, for purposes of
this Section 5.1.4, each Partner's Adjusted Capital Account balance
shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 5.1.4 with respect to such
taxable period. This Section 5.1.4.(a) is intended to comply with the
Partnership Minimum Gain chargeback requirement in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(e) and shall be interpreted consistently
therewith;
(b) Chargeback of Minimum Gain Attributable to Partner
Nonrecourse Debt. Notwithstanding the other provisions of this Section
5.1 (other than Section 5.1.4(a)), if there is a net decrease in
Minimum Gain Attributable to Partner Nonrecourse Debt during any
Partnership taxable period, any Partner with a share of Minimum Gain
Attributable to Partner Nonrecourse Debt at the beginning of such
taxable period shall be allocated items of Partnership income and gain
for such period (and, if necessary, subsequent periods) in proportion
to, and to the extent of an amount equal to the greater of (A) the
portion of such Partner's share of the net decrease in the Minimum
Gain Attributable to Partner Nonrecourse Debt that is allocable (in
accordance with the principles set forth in Treasury Regulation
Section 1.704-1T(b)(4)(iv)(h)(4)) to the disposition of Partnership
property subject to such Partner Nonrecourse Debt, or (B) the deficit
balance in such Partner's Adjusted Capital Account at the end of such
taxable period (Modified, as appropriate, by Treasury Regulations
Section 1.704-1T(b)(4)(iv)(h)(4)). The items to be so allocated shall
be determined in a manner consistent with the principles of Treasury
Regulation Section 1.704-1T(b)(4)(iv)(e) and, for purposes of this
Section 5.1.4, each Partner's Adjusted Capital Account balance shall
be determined and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 5.1.4, other than Section 5.1.4.(a), with
respect to such taxable period. This Section 5.1.4.(b) is intended to
comply with the chargeback of items of income and gain requirement in
Treasury Regulation Section 1.704-1T(b)(4)(iv)(h)(4) and shall be
interpreted consistently therewith;
(c) Qualified Income Offset. Except as provided in Section
5.1.4.(a) and 5.1.4.(b), in the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), (modified, as
appropriate, by Treasury Regulation Sections 1.704-1T(b)(4)(iv)(e)(3)
and 1.704-1T(b)(4)(iv)(h)(4)), items of Partnership income and gain
shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Treasury
Regulations, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as
quickly as possible; provided, that an allocation pursuant to this
Section 5.1.4.(c) shall be made only if and to the extent that such
Partner would have a deficit balance in its Adjusted Capital Account
after all other allocations provided in this Section 5.1 have been
tentatively made as if this Section 5.1.4.(c) was not in this
Agreement;
(d) Gross Income Allocations. In the event any Partner has a
deficit balance in its Capital Account at the end of any Partnership
taxable period that is in excess of the sum of (A) the amount such
Partner is obligated to restore pursuant to any provisions of this
Agreement and (B) the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulation
Sections 1.704-1T(b)(4)(iv)(f) and 1.704-1T(b)(4)(iv)(h)(5), such
Partner shall be specially allocated items of Partnership gross income
and gain in the amount of such excesses as quickly as possible;
provided, that an allocation pursuant to this Section 5.1.4 (d) shall
be made only if and to the extent that such Partner would have a
deficit balance in its Capital Account in excess of such sum after all
other allocations provided for in this Section 5.1 have been
tentatively made as if Section 5.1.4.(c) and this Section 5.1.4.(d)
were not in this Agreement;
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in the same ratios
that Net Income or Net Losses, as the case may be, is allocated for
the taxable year. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be
allocated in a different ratio to satisfy the safe harbor requirements
of the Treasury Regulations promulgated under Section 704(b) of the
Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio to the numerically closest
ratio which does satisfy such requirements;
(f) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulations Section
1.704-1T(b)(4)(iv)(h). If more than one Partner bears the Economic
Risk of Loss with respect to a Partner Nonrecourse Debt, such Partner
Nonrecourse Deductions attributable thereto shall be allocated between
or amoung such Partners in accordance with the ratios in which they
share such Economic Risk of Loss;
(g) Nonrecourse Liabilities. For purposes of Treasury Regulation
Section 1.752-1T(e)(ii)(C), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Partners in accordance with
their respective Percentage Interests;
(h) Code Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Partnership asset pursuant to Section
734(b) or 743(b) of the Code is to be taken into account in
determining Capital Accounts, the amount of such adjustment to the
Capital Accounts treated as an item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
(i) Curative Allocation.
(A) Notwithstanding any other provision of this Section 5.1,
other than the Required Allocations, The Required Allocations
shall be taken into account in making the Agreed Allocations so
that, to the extent possible, the net amount of items of income,
gain, loss and deduction allocated to each Partner pursuant to
the Required Allocations and the Agreed Allocations, together,
shall be equal to the net amount of such items that would have
been allocated to each Partner under the Agreed Allocations had
the required Allocations and this Curative Allocation not
otherwise been provided in this Section 5.1. Notwithstanding the
preceding sentence, Required Allocations relating to (1)
Nonrecourse Deductions shall not be taken into account except to
the extent that there has been a decrease in Partnership Minimum
Gain and (2) Partner Nonrecourse Deductions shall not be taken
into account except to the extent that there has been a decrease
in Minimum Gain Attributable to Partner Nonrecourse Debts.
Allocations pursuant to this Section 5.1.4.(i)(A) shall only be
made with respect to Required Allocations to the extent the
General Partner reasonably determines that such allocations will
otherwise be inconsistent with the economic agreement among the
Partners. Further, allocations pursuant to this Section
5.1.4.(i)(A) shall be deferred with respect to allocations
pursuant to clauses (1) and (2) hereof to the extent the General
Partner reasonably determines that such allocations are likely to
be offset by subsequent Required Allocations;
(B) The General Partner shall have reasonable discretion,
with respect to each taxable period, to (1) apply the provisions
of Section 5.1.4.(i)(A) in whatever order is most likely to
minimize the economic distortions that might otherwise result
from the Required Allocations, and (2) divide all allocations
pursuant to Section 5.1.4(i)(A) amoung the Partners in a manner
that is likely to minimize such economic distortions.
(j) Rental Deductions. In the event that the General Partner's
Capital Account is credited as a result of a payment described in the
last sentence of Section 4.3.1, the General Partner shall be allocated
the rental deduction attributable to such payment.
5.2 Allocations for Tax Purposes.
5.2.1. Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of income,
gain, loss or deduction (computed in accordance with Section 4.3.2) is
allocated pursuant to Section 5.1.
5.2.2. In an attempt to eliminate Book-Tax Disparities attributable to
a Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation and cost recovery deductions shall be allocated for federal
income tax purposes among the Partners as follows:
(a) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) except as
otherwise provided in Section 5.2.2.(d), any item of Residual Gain or
Residual Loss attributable to a Contributed Property shall be
allocated among the Partners in the same manner as its correlative
item of gain or loss is allocated pursuant to Section 5.1.
(b) (A) In the case of an Adjusted Property, such items shall (1)
first, be allocated among the Partners in a manner consistent with the
principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Section 4.3.4.(a) or 4.3.4.(b),
and (2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a manner
consistent with Section 5.2.2.(a)(A); and (B) except as otherwise
provided in Section 5.2.2.(d), any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of gain or loss is
allocated pursuant to Section 5.1.
(c) Except as otherwise provided in Section 5.2.2.(d), all other
items of income, gain, loss and deduction shall be allocated among the
Partners in the same manner as their correlative item of gain or loss
is allocated pursuant to Section 5.1.
(d) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2.2.(a)(B), 5.2.2.(b)(B) or 5.2.2.(c) shall
be subject to allocation by the General Partner in a manner designated
to eliminate, to the maximum extent possible, Book-Tax Disparities in
a Contributed Property or Adjusted Property otherwise resulting from
the applications of the "ceiling" limitation (under Section 704(c) of
the Code or Section 704(c) principles) to the allocations provided
under Section 5.2.2.(a)(A) or 5.2.2.(b)(A).
5.2.3. For proper administration of the Partnership and for the
preservation of uniformity of the LP Units of the Investor Partnership (or
any class or classes thereof), the General Partner shall have sole
discretion to (i) adopt such conventions as it deems appropriate in
determining the amount of depreciation, amortization and cost recovery
deductions; (ii) make special allocations for federal income tax purposes
of income (including gross income) or deductions; and (iii) amend the
provisions of this Agreement as appropriate (x) to reflect the proposal or
promulgation of Treasury Regulations under Section 704(b) or Section 704(c)
of the Code or (y) otherwise to preserve or achieve uniformity of the LP
Units of the Investor Partnership (or any class or classes thereof). The
General Partner may adopt such conventions, make such allocations and make
such amendments to this Agreement as provided in this Section 5.2.3, only
if such conventions, allocations or amendments would not have a material
adverse effect on the Partners, the holders of any class or classes of LP
Units of the Investor Partnership issued and outstanding or the
Partnership, and if such allocations are consistent with the Principles of
Section 704 of the Code.
5.2.4. The General Partner in its sole discretion may determine to
depreciate the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate
derived from the depreciation method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of
such approach with proposed Treasury Regulation Section 1.168-2(n) and
Treasury Regulation Section 1.167(c)-1(a)(6). If the General Partner later
determines that such reporting position cannot reasonably be taken, the
General Partner may adopt a depreciation convention under which all
purchasers acquiring LP Units of the Investor Partnership in the same month
would receive depreciation, based upon the same applicable rate as if they
had purchased a direct interest in the Partnership's property. If the
General Partner chooses not to utilize such aggregate method, the General
Partner may use any other reasonable depreciation convention to preserve
the uniformity of the intrinsic tax characteristics of any LP Units of the
Investor Partnership that would not have a material adverse effect on the
Limited Partners or the Record Holders of any class or classes of LP Units
of the Investor Partnership.
5.2.5. Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership Asset shall, to the extent possible,
after taking into account other required allocations of gain pursuant to
this Section 5.2 be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated any
deductions directly or indirectly giving rise to the treatment of such
gains as Recapture Income.
5.2.6. All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and allocated
to the Partners in accordance with the provisions hereof shall be
determined without regard to any election under Section 754 of the Code
which may be made by the Partnership; provided, however, that such
allocations once made, shall be adjusted as necessary or appropriate to
take into account those adjustments permitted or required by Sections 734
or 743 of the Code.
5.2.7. Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of the General Partner
or the Limited Partners shall, for federal income tax purposes, be
determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the New York Stock Exchange
on the first Business Day of each month; provided, however, that (i) except
as otherwise provided in clause (ii), such items for the period beginning
on the Closing Date and ending on the last day of the month in which the
Closing Date occurs shall be allocated to Partners as of the opening of the
New York Stock Exchange on the first Business Day of the next succeeding
month or (ii) if the Over-allotment Option is exercised, such items for the
period beginning on the Closing Date and ending on the last day of the
month in which the Second Time of Delivery (as defined in the Underwriting
Agreement (as defined in the Investor Partnership Agreement)) occurs shall
be allocated to the Partners as of the opening of the New York Stock
Exchange on the first Business Day of the next succeeding month; and
provided, further, that gain or loss on a sale or other disposition of any
Partnership Assets other than in the ordinary course of business shall be
allocated to the Partners as of the opening of the New York Stock Exchange
on the first business Day of the month in which such gain or loss is
recognized for federal income tax purposes. The General Partner may revise,
alter or otherwise modify such methods of allocation as it determines
necessary, to the extent permitted or required by Section 706 of the Code
and the regulations or rulings promulgated thereunder.
5.2.8. The General Partner shall amend or supplement this Article 5 to
provide for the allocation of any item of income, gain, loss, deduction or
credit for federal, state or local income tax purposes for which provision
is not otherwise made herein in the manner that the General Partner
determines to be reasonable, taking into account the requirements of the
Code.
5.2.9. Notwithstanding any other provision of this Section 5.2, if the
Internal Revenue Service is successful in asserting an adjustment to the
taxable income of the General Partner and, as a result of any such
adjustment, the Partnership is entitled to a deduction for federal income
tax purposes with respect to any portion of such adjustment, such deduction
shall be allocated to the General Partner.
5.3. Requirement and Characterization of Distributions. Within 45 days
following the end of each calendar quarter (or following the period from the
Closing Date to December 31, 1989) and amount equal to 100% of Available Cash
with respect to such quarter (or period) shall be distributed by the Partnership
to the Partners in accordance with their Percentage Interests. The foregoing
shall not be deemed to require any distribution of cash if and to the extent
such distribution would be prohibited by applicable law or by any loan
agreement, security agreement, mortgage, debt instruments or any other agreement
or obligation to which the Partnership is a party or by which it is bound or to
which its assets are subject.
5.4. Reimbursements and Payments. Amounts payable as reimbursement of the
General Partner pursuant to Section 6.3 or amounts payable to any Person other
than in his capacity as a Partner, such as for services rendered, goods
purchased or money borrowed, shall not be treated as distributions for purposes
of this Article 5.
ARTICLE 6
MANAGEMENT AND OPERATION OF BUSINESS
6.1. Management.
6.1.1. Except as otherwise expressly provided in this Agreement, all
decisions respecting any matter set forth herein or otherwise affecting or
arising out of the conduct of the business of the Partnership shall be made
by the General Partner, and the General Partner shall have the exclusive
right and full authority to manage, conduct, control and operate the
Partnership's business and effect the purposes and provisions of this
Agreement. Except as otherwise expressly provided in this Agreement, the
General Partner shall have full authority to do all things on behalf of the
Partnership deemed necessary or desirable by it in the conduct of the
business of the Partnership, including without limitation, (i) the making
of any expenditures, the borrowing of money, the guaranteeing of
indebtedness and other liabilities, the issuance of evidences of
indebtedness and the incurring of any obligations it deems necessary for
the conduct of the activities of the Partnership; (ii) the making of tax,
regulatory and other filings, or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the business or
assets of the Partnership; (iii) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or exchange of any assets of the
Partnership or the merger or other combination of the Partnership with or
into another entity (all of the foregoing subject to any prior approval
which may be required by Section 6.1.l; (iv) the use of the assets of the
Partnership (including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it sees fit,
including without limitation, the financing of the conduct of the
operations of the Partnership, the lending of funds to other persons and
the repayment of obligations of the Partnership; (v) the negotiation and
execution on any terms deemed desirable in its sole discretion and the
performance of any contracts, conveyances or other instruments that it
considers useful or necessary to the conduct of the Partnership operations
or the implementation of its powers under this Agreement; (vi) the
distribution of Partnership cash; (vii) the selection and dismissal of
employees (including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer") and agents,
outside attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or
hiring; (viii) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate; (ix) the
formation of, or acquisition of an interest in, and the contribution of
property to, any further limited or general partnerships, joint ventures or
other relationships that it deems desirable; (x) the control of any matters
affecting the rights and obligations of the Partnership, including the
conduct of litigation and the incurring of legal expense and the settlement
of claims and litigation; and (xi) the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness and the
securing of same by mortgage, deed of trust or other lien or encumbrance,
the bringing and defending of actions at law or in equity and the
indemnification of any Person against liabilities and contingencies to the
extent permitted by law.
6.1.2. Each of the Partners and each other Person who may acquire a
Partnership Interest hereby approves, ratifies and confirms the execution,
delivery and performance by the parties thereof to the Underwriting
Agreement, the Contribution Agreement, the Conveyance and Assignment, the
Assignment of Leases and the other agreements described in the Registration
Statement and agrees that the General Partner is authorized to execute,
deliver and perform the above-mentioned agreements and transactions and
such other agreements described in the Registration Statement on behalf of
the Partnership without any further act, approval or vote of the Partners
or any other Person who may acquire a Partnership Interest notwithstanding
any other provision of this Agreement, the Delaware Act or any applicable
law, rule or regulations. None of the execution, delivery or performance by
the General Partner, the Partnership or any Affiliate of any of them of any
agreement authorized or permitted under this Agreement shall constitute a
breach by the General Partner of any duty that the General Partner may own
the Partnership or the Limited Partners or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
6.1.3. The General Partner shall cause to be filed the Certificate of
Limited Partnership as required by the Delaware Act and shall cause to be
filed such other certificates or documents as may be required for the
formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware or any other state in which the
Partnership elects to do business or own property. The General Partner
shall file any necessary amendments to the Certificate of Limited
Partnership, including, without limitation, amendments to reflect a
successor or additional General Partner admitted pursuant to Section 11.2,
and shall otherwise use its best efforts to do all things (including the
appointment of registered agents of the Partnership and maintenance of
registered offices of the Partnership) requisite to the maintenance of the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) under the laws of the State of Delaware or
any other state in which the Partnership may elect to do business or own
property. Where applicable law so permits, the General Partner may omit
from certificates filed in the State of Delaware and in states in which the
Partnership elects to do business or own property all information not
required by law, including the names and addresses of Partners, or state
such information in the aggregate rather than on an individual Partner
basis. Except as provided in Section 7.4.1, the General Partner shall not
be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership or any amendment thereto to any Limited
Partner or Record Holder.
6.2. Reliance By Third Parties. Notwithstanding any other provision of this
Agreement to the contrary, no lender, purchaser or other Person dealing with the
Partnership shall be required to look to the application of proceeds hereunder
or to verify any representation by the General Partner as to the extent of the
interest in Partnership Assets that the General Partner is entitled to encumber,
sell or otherwise use, and any such lender, purchaser or other Person shall be
entitled to rely exclusively on the representations of the General Partner as to
its authority to enter into such arrangements and shall be entitled to deal with
the General Partner, without the joinder of any other Person, as if the General
Partner were the sole party in interest therein, both legally and beneficially.
Each Limited Partner hereby waives any and all defenses or other remedies that
may be available against such lender, purchaser or other Person to contest,
negate or disaffirm any action of the General Partner in connection with any
such arrangement. In no event shall any Person dealing with the General Partner
or the General Partner's representative with respect to any business or property
of the Partnership be obligated to ascertain that the terms of this Agreement
have been complied with, or be obligated to inquire into the necessity or
expediency of any act or action of the General Partner or the General Partner's
representative; and every contract, agreement, deed, mortgage, security
agreement, promissory note or other instrument or document executed by the
General partner or the General partner's representative with respect to any
business or property of the Partnership shall be conclusive evidence in favor of
any and every Person relying thereon or claiming thereunder that (i) at the time
of the execution and delivery thereof, this Agreement was in full force and
effect, (ii) such instrument or document was duly executed in accordance with
the terms and provisions of this Agreement and is binding upon the Partnership
and (iii) the General Partner or the General Partner's representative was duly
authorized and empowered to execute and deliver any and every such instrument or
document for and on behalf of the Partnership.
6.3. Compensation and Reimbursement of the General Partner.
6.3.1. Except as otherwise provided in this Section 6.3, the General
Partner shall not be compensated for its services as general partner of the
Partnership.
6.3.2. The General Partner shall be reimbursed for all expenses,
disbursements, and advances incurred or made in connection with the
organization of the Partnership and the qualification of the Partnership
and the General Partner to do business.
6.3.3. The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses it incurs or makes on
behalf of the Partnership (including amounts paid to any Person to perform
services for the Partnership) and (ii) the portion of the General Partner's
or its Affiliate's legal, accounting, utilities, investor communication,
telephone, secretarial, travel, entertainment, bookkeeping, reporting, data
processing, office rent and other office expenses (including overhead
charges), salaries, fees and other compensation and benefit expenses of
employees, officers and directors, other administrative or overhead
expenses and all other direct and indirect administrative and incidental
expenses, in each case necessary or appropriate to the conduct of the
Partnership's business (including, without limitation, expenses allocated
to the General Partner by its Affiliates). The General Partner shall
determine such fees and expenses that are allocated to the Partnership in
any reasonable manner in its sole discretion. Such reimbursements shall be
in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 6.7.
6.4. Partnership Funds. The funds of the Partnership shall be deposited in
such account or accounts as are designated by the General Partner. The General
Partner may, in its sole discretion, deposit funds of the Partnership in a
central account maintained by or in the name of the General Partner or the
Partnership in which funds of the Investor Partnership are also deposited,
provided that at all times books of account are maintained which show the amount
of funds of the Partnership on deposit in such account. All withdrawals from or
charges against such accounts shall be made by the General Partner or by its
officers or agents. Funds of the Partnership may be invested as determined by
the General Partner, except in connection with acts otherwise prohibited by this
Agreement.
6.5. Loans from the General Partner: Contracts with Affiliates.
6.5.1. The General Partner or any Affiliate thereof may lend to the
Partnership funds needed by the Partnership for such periods of time as the
General Partner may determine; provided, however, that the General Partner
or such Affiliate may not charge the Partnership interest at a rate greater
than the lesser of (i) the actual interest cost (including points or other
financing charges or fees) that the General Partner or such Affiliate is
required to pay on funds borrowed by it from commercial banks and (ii) the
rate (including points or other financing charges or fees) that would be
charged the Partnership (without reference to the General Partner's
financial abilities or guaranties) by unrelated lenders on comparable
loans. The Partnership shall reimburse the General Partner or any
Affiliate, as the case may be, for any costs incurred by it in connection
with the borrowing of funds obtained by the General Partner or such
Affiliate and loaned to the Partnership. The Investor Partnership may lend
or contribute to the Partnership, and the Partnership may borrow funds from
the Investor Partnership, on terms and conditions established at the sole
discretion of the General Partner. The foregoing authority shall be
exercised by the General Partner in its reasonable discretion and shall not
create any right or benefit in favor of the Partnership or any other
Person. The Partnership may not lend funds to the General Partner or any of
its Affiliates. For purposes of this Section 6.5.1, the Investor
Partnership shall not bee deemed to be an Affiliate of the General Partner.
6.5.2. The General Partner may itself, or may enter into an agreement
with an Affiliate of the General Partner to, render services to the
Partnership. Any service rendered to the Partnership by the General partner
or any such Affiliate shall be on terms that are fair and reasonable to the
Partnership.
6.5.3. The General Partner or any of its Affiliates may use or lease
property (including, but not limited to, office equipment, computers,
vehicles, aircraft and office space) of the Partnership, and the General
Partner or such Affiliate will reimburse the Partnership based on the
incremental cost to the Partnership of such usage.
6.5.4. Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from,
the Partnership, directly or indirectly, except pursuant to transactions
that are fair and reasonable to the Partnership; provided, however, that
the requirements of this Section 6.5.4 shall be deemed to be satisfied as
to the transactions effected pursuant to Section 4.2, the Contribution
Agreement, the Conveyance and Assignment and the Assignment of Leases.
6.6. Liability of Indemnitees.
6.6.1. No Indemnitee shall be liable to the Partnership, Limited
Partners or any Persons who have acquired any interests in LP Units of the
Investor Partnership, whether as Limited Partners or otherwise, for losses
sustained or liabilities incurred as a result of any act or omission if
such Indemnitee acted in good faith and in a manner it reasonably believed
to be in, or not opposed to, the best interests of the Partnership and if
such act or omission did not constitute gross negligence or willful
misconduct on the part of such Indemnitee.
6.6.2. The General Partner may exercise any of the powers granted to
it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or through its agents, and the General Partner
shall not be responsible for any act or omission on the part of any such
agent appointed by the General Partner in good faith if the agent acted in
a manner it reasonably believed to be in, or not opposed to, the best
interests of the Partnership and if such act or omission did not constitute
gross negligence or willful misconduct on the part of such Person.
6.6.3. Any amendment, modification or repeal of this Section 6.6 or
any provision hereof shall be prospective only and shall not in any way
affect the limitations or the liability to the Partnership and the Limited
Partners of the General Partner, their directors, officers and employees
under this Section 6.6 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
6.7. Indemnification.
6.7.1. To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, each Indemnitee shall be
indemnified and held harmless by the Partnership from and against any and
all losses, claims, damages, liabilities, whether joint or several,
expenses (including legal fees and expenses), judgments, fines, settlements
and other amounts arising from any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative, in which
the Indemnitee may be involved, or threatened to be involved, as a party or
otherwise, by reason of its status as (x) a General Partner, a Departing
Partner or any of their Affiliates, (y) an officer, director, employee or
agent of a General Partner, any Departing Partner or any of their
Affiliates or (z) a Person serving at the request of the Partnership in
another entity in a similar capacity, regardless of whether the Indemnitee
continues to be a General Partner or an Affiliate of a General Partner or
an officer, director, employee, partner or agent of a General Partner or an
Affiliate of a General Partner at the time any such liability or expense is
paid or incurred, provided that in each case the Indemnitee acted in good
faith and in a manner it reasonably believed to be in, or not opposed to,
the best interests of the Partnership and such action did not constitute
gross negligence or willful misconduct on the part of the Indemnitee, and,
with respect to any criminal proceeding, the Indemnitee had no reasonable
cause to believe its conduct was unlawful. The termination of any action,
suit or proceeding by a judgment, order, settlement, conviction or upon a
plea of nolo contendere, or its equivalent, shall not, of itself, create a
presumption that the Indemnitee acted in a manner contrary to that
specified above.
6.7.2. To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee in defending any claim,
demand, action, suit or proceeding subject to this Section 6.7, or in
establishing any right to indemnification hereunder, shall, from time to
time, be advanced by the Partnership prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Partnership
of any undertaking (which need not be secured) by or on behalf of the
Indemnitee to repay such amount if it shall be determined that such Person
is not entitled to be indemnified as authorized in this Section 6.7.
6.7.3. This advancement of expenses and indemnification provided by
this Section 6.7 shall be in addition to any other rights to which an
Indemnitee may be entitled under any agreement, pursuant to any vote of the
Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the
Indemnitee.
6.7.4. To the extent deemed commercially reasonable by the General
Partner, the Partnership shall purchase and maintain at the expense of the
Partnership insurance on behalf of the General Partner, its Affiliates, and
their respective officers, directors, employees, partners, agents and
trustees and such other Persons as the General Partner shall determine
against any liability that may be asserted against or expense that may be
incurred by such Person in connection with the activities of the
Partnership, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
6.7.5. For purposes of this Section 6.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the
Partnership also imposes duties on, or otherwise involves services by, it
to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan pursuant
to applicable law shall be deemed "fines" within the meaning of Section
6.7.1; and action taken or omitted by it with respect to an employee
benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the interest of the participants and beneficiaries
of the plan shall be deemed to be for a purpose which is in, or not opposed
to, the best interests of the Partnership.
6.7.6. Any indemnification hereunder shall be satisfied solely out of
the assets of the Partnership. In no event may an Indemnitee subject the
General Partner or the Limited Partners to personal liability by reason of
these indemnification provisions.
6.7.7. An Indemnitee shall not be denied indemnification in whole or
in part under this Section 6.7 because the Indemnitee had an interest in
the transaction with respect to which the indemnification applied if the
transaction was otherwise permitted by the terms of this Agreement.
6.7.8. The indemnification provided in this Section 6.7 is for the
benefit of the Indemnitees and shall not be deemed to create any right to
indemnification for any other Persons.
6.7.9. No amendment, modification or repeal of this Section 6.7 or any
provision hereof shall in any manner terminate, reduce or impair the right
of any past, present or future Indemnitee to be indemnified by the
Partnership nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 6.7
as in effect immediately prior to such amendment, modification or repeal
with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
6.8. Other Matters Concerning the General Partner.
6.8.1. The General partner may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties.
6.8.2. the General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and
other consultants and advisers selected by it and any opinion of any such
Person as to matters that the General Partner reasonably believes to be
within such Person's professional or expert competencies shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by the General Partner hereunder in good faith and in
accordance with such opinion.
6.8.3. The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact.
Each such attorney shall, to the extent provided by the General Partner in
the power of attorney, have full power and authority to do and perform all
and every act and duty which is permitted or required to be done by the
General Partner hereunder.
6.9. Title to Partnership Assets. All Partnership Assets, whether real or
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership Assets or
any portion thereof. Title to any or all of the Partnership Assets may be held
in the name of the Partnership, the General Partner or one or m ore nominees, as
the General Partner may determine. The General Partner hereby declares and
warrants that any Partnership Assets for which legal title is held in the name
of the General Partner shall be held in trust by the General Partner for the use
and benefit of the Partnership in accordance with the terms and provisions of
this Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership Assets shall be
recorded as the property of the Partnership on its books and records,
irrespective of the name in which legal title to such Partnership Assets is
held.
6.10. Resolution of Conflicts of Interests.
6.10.1. Unless otherwise expressly provided in this Agreement or the
Investor Partnership Agreement, whenever a potential conflict of interest
exists or arises between the General Partner or any of its Affiliates, on
the one hand, and the Partnership, the Investor Partnership or any Partner,
on the other hand, any resolution or course of action in respect of such
conflict of interest shall be permitted and deemed approved by all
Partners, and shall not constitute a breach of this Agreement, of the
Investor Partnership Agreement, of any agreement contemplated herein or
therein, or of any duty stated or implied by law or equity, if the
resolution or course of action is or, by operation of this Agreement, is
deemed to be fair and reasonable to the Partnership. The General Partner
shall be authorized but not required in connection with its resolution of
such conflict of interest to seek Special Approval of a resolution of such
conflict or course of action. Any conflict of interest and any resolution
of such conflict of interest shall be deemed fair and reasonable to the
Partnership upon Special Approval of such conflict of interest or
resolution. The General Partner may also adopt a resolution or course of
action that has not received Special Approval. Any such resolution or
course of action in respect of any conflict of interest shall not
constitute a breach of this Agreement, of the Investor Partnership
Agreement, of any other agreement contemplated herein or therein or of any
duties stated or implied by law or equity, if such resolution or course of
action is fair and reasonable to the Partnership. The General Partner
(including the Independent Committee in connection with Special Approval)
shall be authorized in connection with its resolution of any conflict of
interest to consider (i) the relative interests of any party to such
conflict, agreement, transaction or situation and the benefits and burdens
relating to such interest; (ii) any customary or accepted industry
practices; (iii) any applicable generally accepted accounting or
engineering practices or principles; and (iv) such additional factors as
the General Partner (including such Independent Committee) determines in
its sole discretion to be relevant, reasonable or appropriate under the
circumstances. Nothing contained in this Agreement, however, is intended to
nor shall it be construed to require the General Partner (including such
Independent Committee) to consider the interest of any Person other than
the Partnership. In the absence of bad faith by the General Partner, the
resolutions, action or terms so made, taken or provided by the General
Partner with respect to such matter shall not constitute a breach of this
Agreement or any other agreement contemplated herein or a breach of any
standard of care or duty imposed herein or therein or under the Delaware
Act or any other law, rule or regulation.
6.10.2. Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is
permitted or required to make a decision (i) in its "discretion" or under a
grant of similar authority or latitude, the General Partner or such
Affiliate shall be entitled to consider only such interests and factors as
it desires and shall have no duty or obligation to give any consideration
to any interest of, or factors affecting, the Partnership or any Limited
Partner, or (ii) in "good faith" or under another express standard, the
General partner or such Affiliate shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement or any other agreement contemplated hereby. In addition, any
actions taken by the General Partner consistent with the standards of
"reasonable discretion" set forth in the definitions of Available Cash
shall not constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partners. During the Preference Period (as
defined in the Investor Partnership Agreement), the General Partner shall
have no duty, express or implied, to sell or otherwise dispose of any asset
of the Partnership, other than in the ordinary course of business. No
borrowing by the Partnership or the approval thereof by the General Partner
shall be deemed to constitute a breach of any duty of the General Partner
to the Partnership or the Limited Partners solely by reason of the fact
that the purpose or effect of such borrowing is directly or indirectly to
avoid subordination of the Preference Units or Common Units (as such terms
are defined in the Investor Partnership Agreement) by reason of the
provisions of Section 5.4 or 5.5 of the Investor Partnership Agreement.
6.10.3. Whenever a particular transaction, arrangement or resolution
of a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such
transaction, arrangement or resolution shall be considered in the context
of all similar or related transactions.
6.11. Restrictions on General Partner's Authority.
6.11.1. The General Partner may not, without the written approval of
the specific act by all of the Limited Partners or by other written
instrument executed and delivered by all of the Limited Partners subsequent
to the date of this Agreement, do any of the following: (i) take any action
in contravention of this Agreement, (ii) take any action that would make it
impossible to carry on the ordinary business of the Partnership, except as
otherwise provided in this Agreement, (iii) possess Partnership property,
or assign any rights in specific Partnership property, for other than a
Partnership purpose, (iv) admit a Person as a Partner, except as otherwise
provided in this Agreement, (v) amend this Agreement in any manner, except
as otherwise provided in this Agreement or (vi) transfer its interest as
general partner of the Partnership, except as otherwise provided in Section
10.2 hereof.
6.11.2. Except as provided in Article 13, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other
combination with any other Person), without the approval of all the Limited
Partners; provided, however, that this provision shall not preclude or
limit the mortgage, pledge, hypothecation or grant of a security interest
in all or substantially all of the Partnership's assets and shall not apply
to any forced sale of any or all of the Partnership's assets pursuant to
the foreclosure of, or other realization upon, any such encumbrance.
6.11.3. Unless approved by all the Limited Partners, the General
Partner shall not take any action or refuse to take any reasonable action
the effect of which, if taken or not taken, as the case may be, would be to
cause the Partnership to become taxable as a corporation or to be treated
for federal income tax purposes as an association taxable as a corporation.
6.11.4. At all times while serving as the general partner of the
Partnership, the General Partner will not pay any dividend on, repurchase
any shares of its capital stock or take any other action if the effect of
such dividend, repurchase or other action would be to reduce its net worth
below an amount necessary to receive an Opinion of counsel that the
Partnership will be treated as a partnership for federal income tax
purposes.
6.12. Outside Activities.
6.12.1. Except as described in the Registration Statement or as
provided in Section 6.12.2, no Indemnitee shall be expressly or implicitly
restricted or proscribed pursuant to this Agreement or the partnership
relationship established hereby from engaging in other activities for
profit, whether in the business engaged in by the Partnership or
anticipated to be engaged in by the Partnership or otherwise, including,
without limitation, those businesses described in or contemplated by the
Registration Statement. Without limitation of and subject to the foregoing
and Section 6.12.2, each Indemnitee shall have the right to engage in the
transportation of refined petroleum products and any other business of
every type and description and to engage in and possess an interest in
other business ventures of any and every type and description,
independently or with others, including business interests and activities
in direct competition with the Partnership. Neither the Partnership, any
Limited Partner nor any other Person shall have any rights by virtue of
this Agreement or the partnership relationship established hereby in any
business ventures of any Indemnitee, and, except as set forth in the
Registration Statement, such Indemnitees shall have no obligation to offer
any interest in any such business ventures to the Partnership, any Limited
Partner or any such other Person.
6.12.2. Without limitation of this Section 6.12, the competitive
activities of certain Indemnitees and the restrictions on the Partnership's
activities described in the Registration Statement under the caption
"Conflicts of Interest and Fiduciary Responsibilities" are hereby approved
by all Partners; provided, however that this Section 6.12 shall not operate
as a waiver by the Partnership or any Limited Partner of any breach of
fiduciary duty resulting from competition by an Indemnitee with the
Partnership.
ARTICLE 7
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 Limitation of Liability. The Limited Partners shall have no liability
under this Agreement except as provided in this Agreement or by the Delaware
Act.
7.2 Management of Business. No Limited Partner (other than the General
Partner, any of its Affiliates or any director, officer, general partner,
employee or agent of the General Partner or any of its Affiliates, in his
capacity as such, if such Person shall also be a Limited Partner) shall take
part in the operation, management or control (within the meaning of the Delaware
Act) of the Partnership's business, transact any business in the Partnership's
name or have the power to sign documents for or otherwise bind the Partnership.
The transaction of any such business by a director, officer, general partner,
employee or agent of the General Partner or any of its Affiliates shall not
affect, impair or eliminate the limitation son the liability of any Limited
Partner under this Agreement.
7.3 Return of Capital. No Limited Partner shall be entitled to the
withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law, and then only to the extent
provided for in this Agreement. Except to the extent provided by Article 5 or as
otherwise expressly provided in this Agreement, no Limited Partner shall have
priority over any other Limited Partner either as to the return of Capital
Contribution or as to profits, losses or distributions.
7.4. Access to Information.
7.4.1. In addition to other rights provided by this Agreement or by
applicable law, each Limited Partner, and each Limited Partner's duly
authorized representatives shall have the right at reasonable times, upon
reasonable notice which shall not be less than three Business Days, and at
such Person's own expense, but only upon its written request and for a
purpose reasonably related to such Person's interest as a Limited Partner,
to (i) have true and full information regarding the status of the business
and financial condition of the Partnership, (ii) inspect and copy, promptly
after they become available, the Partnership's federal, state and local
income tax returns for each year, (iii) have on demand a current list of
the full name and last known business, residence or mailing address of each
Partner, (iv) have true and full information regarding the Net Agreed Value
of any Capital Contributions made by the General Partner and the Limited
Partners and the date on which each such Person became a General Partner or
Limited Partner, (v) have a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto, together with copies of
executed powers of attorney pursuant to which this Agreement or any such
Certificate has been executed and (vi) have any other information regarding
the affairs of the Partnership as is just and reasonable.
7.4.2. Anything in Section 7.4.1 to the contrary notwithstanding, the
General Partner may keep confidential from the Limited Partners, and each
Limited Partner's duly authorized representatives, for such period of time
as the General Partner deems reasonable, any information that the General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage
the business of the Partnership or which the Partnership is required by law
or by agreements with third parties to keep confidential.
ARTICLE 8
BOOKS, RECORDS, ACOCUNTING AND REPORTS
8.1 Records and Accounting. The General Partner shall keep or cause to be
kept complete and accurate books and records with respect to the Partnership's
business, which books and records shall at all times be kept at the principal
office of the Partnership. Any records maintained by the Partnership in the
regular course of its business, including books of account and records of
Partnership proceedings, may be kept on or be in the form of punch cards,
magnetic media, photographs, micrographics or any other information storage
device, provided that the records so kept are convertible into clearly legible
written form within a reasonable period of time. The books of the Partnership
shall be maintained on the accrual basis in accordance with generally accepted
accounting principles, except to the extent otherwise required herein.
8.2. Fiscal Year. The fiscal year of the Partnership shall be the calendar
year.
ARTICLE 9
TAX MATTERS
9.1 Section 754 Allocations. The adjustments to basis to Partnership Assets
that are attributable to the Section 754 Election shall be allocated to the
Partners in the manner that the General Partner determines is reasonable,
however, no such adjustment shall be credited or charged to the Capital
Accounts.
9.2. Preparation of Tax Returns. The General Partner shall arrange for the
preparation and timely filing of all returns of the Partnership necessary for
federal income tax purposes and state and local income tax purposes in the
jurisdictions in which the Partnership conducts business and shall use its
reasonable best efforts to furnish to the Record Holders within 75 days of the
close of the taxable year the tax information reasonably required for federal,
state and local income tax reporting purposes. The classification, realization
and recognition of income, gain, losses and deductions and other items shall be
on the accrual method of accounting for federal income tax purposes. The taxable
year of the Partnership shall be the calendar year.
9.3. Tax Elections.
9.3.1. The Partnership shall make the Section 754 Election in
accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke any such election upon the
General Partner's determination that such revocation is in the best
interest of the Limited Partners.
9.3.2. The Partnership shall elect to deduct expenses incurred in
organizing the Partnership ratably over a sixty-month period as provided in
Section 709 of the Code.
9.3.3. Except as otherwise provided herein, the General Partner shall
determine whether to make any other available elections (including the
elections provided for in Sections 167 and 168 of the Code) on behalf of
the Partnership under the Code.
9.4. Tax Controversies. Subject to the provisions hereof, the General
Partner is designated as the Tax Matters Partner (as defined in Section 6231 of
the Code) and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs
associated therewith. Each Partner agrees to cooperate with the General Partner
and to do or refrain from doing any or all things reasonably required by the
General Partner to conduct such proceedings.
9.5. Tax Basis and Value Determinations. To the extent that the General
Partner is required to establish fair market values or allocate amounts
realized, tax basis, Carrying Values or Net Agreed Values, the General Partner
shall establish such values and make such allocations in a manner that is
reasonable and fair to the Limited Partners, taking into account all applicable
laws, governmental regulations, rulings and decisions. The General Partner may,
in its sole discretion, modify or revise such allocations in order to comply
with such laws, governmental regulations, rulings or decisions or to the extent
it otherwise deems such modification or revision appropriate or necessary. The
General Partner is authorized, to the extent deemed by it to be appropriate or
necessary, to utilize the service of an independent appraiser in establishing
such values or allocations and the General Partner shall in such cases be
entitled to rely on the values or allocations established by such independent
appraiser.
9.6. General Partner Net Worth. The General Partner shall not declare or
make payment of any dividends (except dividends payable solely in capital
stock), purchase, redeem, retire or otherwise acquire for value any of its
capital stock now or hereafter outstanding, return any capital or make any
distribution of assets on account of any shares of its capital stock, if any
such action would reduce its net worth (computed by excluding any net worth
attributable to its interest in, and accounts and notes receivable from, or
payable to, the Partnership or any other limited partnership in which it is a
general partner) below $5,000,000 (or such other lesser amount as may be
required to obtain an Opinion of Counsel that the Partnership is not taxable as
a corporation and will not be treated as an association taxable as a
corporation).
ARTICLE 10
TRANSFER OF PARTNERSHIP INTERESTS
10.1. Transfer.
10.1.1. The term "transfer", when used in this Article 10 with respect
to a Partnership Interest, shall be deemed to refer to a transaction by
which a Partner assigns all or any part of its Partnership Interest to
another Person and includes a sale, assignment, gift, pledge,
hypothecation, mortgage, exchange or any other disposition.
10.1.2. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 10. Any transfer or purported transfer of any Partnership Interest
not made in accordance with this Article 10 shall be null and void.
10.2. Transfer of Interests of the General Partner. The General Partner may
not transfer any portion of its Partnership Interest as the general partner of
the Partnership; provided, however, that if the general partner of the Investor
Partnership transfers any portion of its partnership interest as a general
partner therein to any Person in accordance with the provisions of the Investor
Partnership Agreement, the General Partner shall also transfer the same portion
of its Partnership Interest as the general partner of the Partnership to such
Person. The Limited Partners hereby approve of any such transfer.
10.3. Transfer of Partnership Interests of Limited Partners.
10.3.1. No Limited Partner may withdraw from the Partnership or
transfer all or any part of its Partnership Interest except that a
successor of a Limited Partner may become a Substituted Limited Partner as
provided in Article 11.
10.3.2. Notwithstanding the foregoing, the Partnership Interest as a
limited partner to be acquired by KPL pursuant to Section 4.2 may be
transferred to the Investor Partnership pursuant to the Contribution
Agreement, and the Investor Partnership shall become a Substituted Limited
Partner with respect to such Partnership interest.
ARTICLE 11
ADMISSION OF PARTNERS
11.1. Admission of Substituted Limited Partners. Any successor to the
Partnership Interest of a Limited Partner shall be admitted to the Partnership
as a Limited Partner upon the (a) furnishing to the General Partner (i) an
acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement and (ii) such other documents and instruments as
may be required to effect the admission of such successor as a Limited Partner;
and (b) obtaining of the consent of the General Partner, which consent may be
withheld or granted in the sole discretion of the General Partner. The
transferee shall be admitted to the Partnership as a Limited Partner effective
immediately prior to the transfer.
11.2. Admission of Successor or Additional General Partner. A successor or
additional General Partner selected pursuant to Section 12.2 or 12.3 or the
transferee or successor to of all or any portion of the Partnership Interest of
the General Partner pursuant to Section 10.2 shall be admitted to the
Partnership as a General Partner (in the place of or in addition to, as the case
may be, the transferor General Partner), effective as of the date that an
amendment to the Certificate of Limited Partnership, adding its name and other
required information, is filed pursuant to Section 6.1.3 (which, in the event
the successor or transferee General Partner is in the place of the withdrawing,
removed or transferor General Partner, shall be contemporaneous with the
withdrawal of such withdrawing, removed or transferor General Partner), and upon
receipt by the withdrawing, removed or transferor General Partner of all of the
following: (i) acceptance of all of the terms and provisions of this Agreement;
(ii) written agreement of the successor or transferee General Partner to
continue the business of the Partnership; and (iii) such other documents or
instruments as may be required in order to effect its admission as a General
Partner under this Agreement and applicable law. Each Limited Partner hereby
approves of the admission of a successor or additional General Partner selected
pursuant to the terms of this Agreement, and no further approval of Partners
shall be required to effect such admission.
ARTICLE 12
WITHDRAWAL OR REMOVAL OF THE GENERAL PARTNER
12.1. Withdrawal or Removal of the General Partner. The General Partner
shall be deemed to have withdrawn from the Partnership upon the occurrence of
any one of the following events (each such event herein referred to as an "Event
of Withdrawal"):
12.1.1. The General Partner voluntarily withdraws from the Partnership
by giving written notice to the other Partners.
12.1.2. The General Partner transfers all of its rights as General
Partner pursuant to Section 10.2 hereof.
12.1.3. The General Partner is removed pursuant to Section 12.3
hereof.
12.1.4. The General Partner
(a) makes a general assignment for the benefit of creditors;
(b) files a voluntary bankruptcy petition;
(c) files a petition or answer seeking for itself a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any law;
(d) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the
General Partner in a proceeding of the type described in paragraphs
(a) through (c) of this subsection; or
(e) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the General Partner or of all or
any substantial part of its properties.
12.1.5. A final and non-appealable judgment is entered by a court with
appropriate jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a
court with appropriate jurisdiction against the General Partner, in each
case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect.
12.1.6. A certificate of dissolution or its equivalent is filed for
the General Partner, or 90 days expire after the date of notice to the
General Partner of revocation of its charter without a reinstatement of its
charter, under the laws of its state of incorporation.
12.1.7. The general partner of the Investor Partnership withdraws
from, or is removed as the general partner of, the Investor Partnership.
If an Event of Withdrawal specified in Sections 12.1.4, 12.1.5 or 12.1.6
occurs, the withdrawing General Partner shall give written notice to the Limited
Partners within 30 days after such occurrence. The Partners hereby agree that
only the Events of Withdrawal described in this Section 12.1 shall result in
withdrawal of the General Partner from the Partnership.
12.2. Withdrawal. The General Partner covenants and agrees that it will not
voluntarily withdraw as the general partner of the Partnership prior to January
1, 2000, other than a withdrawal effective upon the transfer of all of the
General Partner's Partnership Interest as the General Partner pursuant to
Section 10.2, unless such withdrawal is approved by all Limited Partners;
provided that the General Partner may withdraw without such approval by the
Limited Partners upon 90 days' advance written notice to the Limited Partners if
more than 50% of the Outstanding LP Units (as defined in the Investor
Partnership Agreement) are held or controlled by one Person and its Affiliates
other than the withdrawing General Partner and its Affiliates. The General
Partner may, at anytime subsequent to January 1, 2000, voluntarily withdraw from
the Partnership effective on at least 90 day's advance written notice to the
Limited Partners, such withdrawal to take effect on the date specified in such
notice. The General Partner shall have no liability on account of a withdrawal
permitted hereunder. If the General Partner gives notice of withdrawal as
general partner of the Investor Partnership, and the limited partners thereof
select a successor pursuant to the terms of the Investor Partnership Agreement,
the Person so elected shall automatically become the successor General Partner
of the Partnership. If the General Partner gives notice of withdrawal pursuant
to Section 12.1.1, the Limited Partners may, prior to the effective date of such
withdrawal, elect, by unanimous vote of the Limited Partners, the successor
General Partner. If, prior to the effective date of the General Partner's
withdrawal, no successor General Partner is elected, the provisions of Section
13.1 shall apply.
12.3. Removal. The affirmative vote of all the Limited Partners shall be
required to remove the General Partner. Any such vote of the Limited Partners
must also provide for the election of a successor General Partner.
12.4. Opinion of Counsel. Notwithstanding the provisions of Section 12.2 or
12.3, the rights of the Limited Partners under Section 12.2 or 12.3 shall not be
exercised until such time as the Partnership has received an Opinion of Counsel
that the action in question (i) may be taken without the approval of all
Partners to such specific act, (ii) would not cause the loss of limited
liability of the Limited Partners under this Agreement, (iii) would not cause
the Partnership to be taxable as a corporation or to be treated as an
association taxable as a corporation for federal income tax purposes and (iv)
any required consents of any regulatory authorities to such action have been
obtained.
12.5. Amendment of Certificate of Limited Partnership. The Certificate of
Limited Partnership shall be amended to reflect the withdrawal, removal or
succession of the General Partner.
12.6. Interest of Departing Partner and Successor.
12.6.1 (a) If a successor General Partner acquires the
partnership interest as general partner in the Investor Partnership of
the Departing Partner, such successor General Partner must also
acquire at such time the Partnership Interest of such Departing
Partner or its Affiliate as general partner of the Partnership for an
amount equal to the fair market value of such interest, determined as
of the effective date of departure.
(b) For purposes of this Section 12.6, the fair market value of
the Departing Partner's Partnership Interest as the General Partner
herein shall be determined as provided in Section 14.6 of the Investor
Partnership Agreement.
12.6.2. (a) If the Combined Interest (as defined in the Investor
Partnership Agreement) is not acquired in the manner set forth in
Section 14.6 of the Investor Partnership Agreement, the Departing
Partner shall become a limited partner of the Investor Partnership as
provided therein and its Combined Interest shall be converted into
Common Units as provided therein. Any successor General Partner shall
indemnify the Departing Partner as to all debts and liabilities of the
Partnership arising on or after the date on which the Departing
Partner becomes a Limited Partner.
(b) If the option described in Section 12.6.1 is not exercised by
the party entitled to do so, the successor General Partner shall, at
the effective date of its admission to the Partnership, contribute to
the capital of the Partnership cash equal to the greater of (i) 1/99th
of the aggregate Capital Account balances of the Limited Partners as
of such date or (ii) the fair market value of a 1% general partner's
interest in the Partnership, determined by a valuation made by an
investment banking firm or other independent expert selected pursuant
to Section 14.6.1 of the Investor Partnership Agreement. In such
event, the successor General Partner shall, subject to the following
sentence, be entitled to such Percentage Interest of all Partnership
allocations and distributions and any other allocations and
distributions to which the Departing Partner was entitled as general
partner. In addition, such successor General Partner shall cause this
Partnership Agreement to be amended to reflect that, from and after
the date of such successor General Partner's admission, the successor
General Partner's interest in all Partnership distributions and
allocations shall be 1% and that of the Limited Partners shall be 99%.
12.6.3. The Partnership shall reimburse the Departing Partner for
employee related liabilities including but not limited to, severance
liabilities incurred in connection with the termination of employees
employed by the Departing Partner for the benefit of the Partnership; and
if the Partnership is otherwise indebted to the Departing Partner at the
effective time of its departure for funds advanced, properties sold or
services rendered to the Partnership by the Departing Partner or otherwise,
the Partnership shall, at the option of the successor General Partner,
either (i) within 60 days after the effective time of such departure, pay
to the Departing Partner the full amount of such indebtedness or (ii) pay
such indebtedness or any portion thereof in accordance with its then
existing terms. The successor to the Departing Partner shall assume all
obligations theretofore incurred by the Departing Partner as the General
Partner of the Partnership, and the Partnership and such successor General
Partner shall take all such action as shall be necessary to terminate any
guarantees of the Departing Partner and any of its Affiliates of any
obligations of the Partnership. If for whatever reason the creditors of the
Partnership will not consent to such termination of guarantees, the
successor to the Departing Partner shall be required to indemnify the
Departing Partner for any liabilities and expenses incurred by the
Departing Partner on account of such guarantees.
ARTICLE 13
DISSOLUTION AND LIQUIDATION
13.1. Dissolution. Except as provided in Section 13.2, the Partnership
shall be dissolved upon:
13.1.1. the expiration of its term as provided in Section 2.5;
13.1.2. an Event of Withdrawal of the General Partner as provided in
Section 12.1 (other than by reason of a transfer pursuant to Section 10.2
or withdrawal occurring upon or after, or removal effective upon or after,
approval by the Limited Partners of a successor pursuant to Section 12.2 or
12.3, as the case may be);
13.1.3. a written determination by the General Partner that projected
future revenues of the Partnership will be insufficient to enable payment
of projected Partnership costs and expenses or, if sufficient, will be such
that continued operation of the Partnership is not in the best interests of
the Partners;
13.1.4. an election to dissolve the Partnership by the General Partner
which is approved by all the Limited Partners; provided, that no such
election shall be effective at any time when the Partnership has
outstanding any indebtedness for borrowed money unless provision shall have
been made in connection with such dissolution for the payment in full of
such indebtedness;
13.1.5. except as otherwise provided herein, any other event that,
under the Delaware Act, would cause its dissolution;
13.1.6. the sale of all or substantially all of the assets and
properties of the Partnership; or
13.1.7. the dissolution of the Investor Partnership.
The Partnership shall not be dissolved by the admission of a successor
Limited Partner or by the admission of additional or successor General Partners
in accordance with the terms of this Agreement.
13.2. Continuation of the Business of the Partnership.
13.2.1. Within 180 days following an event described in Section
13.1.2, in the event action pursuant to Section 13.3 is not taken, the
Limited Partners by unanimous vote may elect in writing to reconstitute and
continue the business of the Partnership by forming a new limited
partnership (a "Reconstituted Partnership") on the same terms and
provisions as are set forth in this Agreement. Any such election must also
provide for the election of a general partner of the Reconstituted
Partnership. If such an election is made, all of the Limited Partners of
the Partnership shall continue as limited partners of the Reconstituted
Partnership. The Partnership Interest as General Partner of the former
General Partner shall be treated as though it were an equivalent general
partner's interest in the Reconstituted Partnership, and shall be subject
to disposition at the option of the general partner of the Reconstituted
Partnership in the manner provided in Section 12.6.1 (which option must be
exercised contemporaneously with the selection of the new general partner).
13.2.2. Upon an event described in this Section 13.2, all necessary
steps shall be taken to cancel this Agreement and the Certificate of
Limited Partnership of the Partnership and to enter into a new partnership
agreement and certificate of limited partnership of the Reconstituted
Partnership.
13.3. Liquidation.
13.3.1. Upon dissolution of the Partnership, unless an election to
continue the business of the Partnership is made pursuant to Section 13.2,
the General Partner or in the event the dissolution was caused by an event
described in Section 13.1.2 or 13.1.3, a liquidator or liquidating
committee elected by a majority in interest of the Limited Partners, shall
be the Liquidating Trustee. The Liquidating Trustee shall liquidate the
Partnership Assets and apply and distribute the proceeds of such
liquidation in the following order of priority, unless otherwise required
by applicable law.
(a) the payment to creditors of the Partnership, other than
Partners, in order of priority provided by law, including the
establishment of reserves for the payment thereof;
(b) pro rata payment to Partners for loans or other amounts owed
to them by the Partnership;
(c) to all Partners in accordance with the positive balances in
their respective Capital Accounts after taking into account
adjustments to such Capital Accounts pursuant to Section 5.1.3;
(d) to the Partners in proportion to their respective Percentage
Interests.
13.3.2. The Liquidating Trustee (if other than the General Partner)
shall be entitled to receive such compensation for its services as may be
approved by a majority in interest of the Limited Partners. The Liquidating
Trustee shall agree not to resign at any time without 60 days' prior
written notice and (if other than the General Partner) may be removed at
any time, with or without cause, by written notice of removal approved by a
majority in interest of the Limited Partners. Upon dissolution, removal or
resignation of the Liquidating Trustee, a successor and substitute
Liquidating Trustee (who shall have and succeed to all rights, powers and
duties of the original Liquidating Trustee) shall, within 90 days
thereafter, be selected by a majority in interest of the Limited Partners.
The right to appoint a successor or substitute Liquidating Trustee in the
manner provided herein shall be recurring and continuing for so long as the
functions and services of the Liquidating Trustee are authorized to
continue under the provisions hereof, and every reference herein to the
Liquidating Trustee will be deemed to refer also to any such successor or
substitute Liquidating Trustee appointed in the manner herein provided.
Except as expressly provided in this Article 13, the Liquidating Trustee
appointed in the manner provided herein shall have and may exercise,
without further authorization or consent of any of the parties hereto, all
of the powers conferred upon the General Partner, under the terms of this
Agreement (but subject to all of the applicable limitations, contractual
and otherwise, upon the exercise of such powers) to the extent necessary or
desirable in the good faith judgment of the Liquidating Trustee to carry
out the duties and functions of the Liquidating Trustee hereunder
(including the establishment of reserves for liabilities that are
contingent or uncertain in amount) for and during such period of time as
shall be reasonably required in the good faith judgment of the Liquidating
Trustee to complete the winding-up and liquidation of the Partnership as
provided for herein. In the event a majority in interest of the Limited
Partners fail to approve of a Person to be the Liquidating Trustee as
herein provided within 120 days following the event of dissolution or fail
to approve a of successor and substitute Liquidating Trustee within the
time period set forth above, any Partner may make application to a Court of
Chancery of the State of Delaware to wind up the affairs of the Partnership
and, if deemed appropriate, to appoint a Liquidating Trustee.
13.4 Distribution in Kind. Notwithstanding the provisions of Section 13.3
which require the liquidation of the Partnership Assets, but subject to the
order of priorities set forth therein, if on dissolution of the Partnership the
Liquidating Trustee determines that an immediate sale of part or all of the
Partnership Assets would be impractical or would cause undue loss to the
Partners, the Liquidating Trustee may, in its absolute discretion, defer for a
reasonable time the liquidation of any Partnership Assets except those necessary
to satisfy liabilities of the Partnership and may, in its absolute discretion,
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with Section 13.3, undivided interests in such Partnership Assets as
the Liquidating Trustee deems not suitable for liquidation. Any distributions in
kind shall be subject to such conditions relating to the disposition and
management thereof as the Liquidating Trustee deems reasonable and equitable and
to any agreements governing the operation of such Partnership Assets at such
time. The Liquidating Trustee shall determine the fair market value of any
Partnership Assets distributed in kind using such reasonable method of valuation
as it may adopt.
13.5. Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership Assets as provided in Sections
13.3 and 13.4, the Partnership shall be terminated, and the Liquidating Trustee
(or the General Partner or Limited Partners, if necessary) shall cause the
cancellation of the Certificate of Limited Partnership and all qualifications of
the Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware and shall take such other actions as may be necessary to
terminate the Partnership.
13.6. Reasonable Time for Winding Up. A reasonable time shall be allowed
for the orderly winding up of the business and affairs of the Partnership and
the liquidation of its assets pursuant to Section 13.3 in order to minimize any
losses otherwise attendant upon such winding up.
13.7. Return of Contributions. The General Partner shall not be liable for
the return of the Capital Contributions of the Limited Partners, or any portion
thereof, it being expressly understood that any such return shall be made solely
from the Partnership Assets.
13.8. No Capital Account Restoration. No Partner shall have any obligation
to restore any negative balance in its Capital Account upon liquidation of the
Partnership.
13.9. Waiver of Partition. Each Partner hereby expressly waives any and all
rights that it may have to maintain an action for partition of the Partnership's
Assets.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT
14.1. Amendments to be Adopted Solely by the General Partner. The General
Partner, without the consent at the time of any Limited Partner (each Limited
Partner being deemed to approve of any such amendment), may amend any provision
of this Agreement, and execute, swear to, acknowledge, deliver, file and record
whatever documents may be required in connection therewith, to reflect:
14.1.1. a change in the name of the Partnership or the location of the
principal place of business of the Partnership;
14.1.2. the admission, substitution, withdrawal or removal of Partners
in accordance with this Agreement;
14.1.3. a change that is necessary or advisable in the opinion of the
General Partner to qualify or continue the qualification of the Partnership
as a limited partnership or a partnership in which the Limited Partners
have limited liability under the laws of any state or to ensure that the
Partnership will not be taxable as a corporation or treated as an
association taxable as a corporation for federal income tax purposes;
14.1.4. a change that (i) in the sole discretion of the General
Partner does not adversely affect the Limited Partners in any material
respect, (ii) is necessary or desirable to satisfy any requirements,
conditions or guidelines contained in any opinion, directive, order, ruling
or regulation of any federal or state agency or contained in any federal or
state statute or (iii) is required or contemplated by this Agreement or the
Registration Statement;
14.1.5. an amendment that is necessary, as reflected in an Opinion of
Counsel, to prevent the Partnership or the General Partner or its directors
or officers from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as
amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, whether or not substantially
similar to plan asset regulations currently applied or proposed by the
United States Department of Labor;
14.1.6. a change in any provision of this Agreement which requires any
action to be taken by or on behalf of the General Partner or the
Partnership pursuant to the requirements of the Delaware Act if the
provisions of the Delaware Act are amended, modified or revoked so that the
taking of such action is no longer required; provided that this Section
14.1.6 shall be applicable only if such changes are not materially adverse
to the Limited Partners;
14.1.7. any amendment to this Agreement that is necessary to confirm
this Agreement to any amendments made to the Investor Partnership
Agreement; or
14.1.8. any other amendments similar to the foregoing.
14.2. Amendment Procedures. Except as provided in Section 14.1, all
amendments to this Agreement shall require the approval of the General Partner
and all the Limited Partners.
ARTICLE 15
MERGER
15.1. Authority. The Partnership may merge or consolidate with one or more
corporations, business trusts or associations, real estate investment trusts,
common law trusts or unincorporated businesses including, without limitation, a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America pursuant to a
written agreement of merger or consolidation ("Merger Agreement") in accordance
with this Article.
15.2. Procedure for Merger or Consolidation. Merger or consolidation of the
Partnership pursuant to this Article requires the prior approval of the General
Partner. If the General Partner shall determine, in the exercise of its sole
discretion, to consent to the merger or consolidation, the General Partner shall
approve the Merger Agreement, which shall set forth:
15.2.1. The names and jurisdictions of formation or organization of
each of the business entities proposing to merge or consolidate;
15.2.2. The name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(hereafter designated as the "Surviving Business Entity");
15.2.3. The terms and conditions of the proposed merger or
consolidation;
15.2.4. The manner and basis of exchanging or converting the equity
securities of each constituent business entity for or into cash, property
or general or limited partnership interests, rights, securities or
obligations of the Surviving Business Entity; and (a) if any general or
limited partnership interests, securities or rights of any constituent
business entity are not to be exchanged or converted solely for, or into,
cash, property or general or limited partnership interests, rights,
securities or obligations of the Surviving Business Entity, the cash,
property or general or limited partnership interests, rights, securities or
obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such
general or limited partnership interests are to receive in exchange for, or
upon conversion of, their securities or rights, and (b) in the case of
securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business
Entity or any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
15.2.5. A statement of any changes in the constituent documents (the
articles or certificate of incorporation, articles of trust, declaration of
trust, certificate or agreement of limited partnership or other similar
charter or governing document) of the Surviving business Entity to be
effected by such merger or consolidation;
15.2.6. The effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 15.4 or a later
date specified in or determinable in accordance with the Merger Agreement
(provided that if the effective time of the merger is to be later than the
date of the filing of the certificate of merger, it shall be fixed no later
than the time of the filing of the certificate of merger and stated
therein); and
15.2.7. Such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or desirable.
15.3. Approval by Limited Partners of Merger or Consolidation. The General
Partner of the Partnership, upon its approval of the Merger Agreement, shall
direct that the Merger Agreement be submitted for approval by the Limited
Partners. The Merger Agreement shall be approved upon execution thereof by all
the Limited Partners.
15.4. Certificate of Merger. Upon the required approval by the General
Partner and Limited Partners of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.
15.5. Effect of Merger.
15.5.1. Upon the effective date of the certificate of merger:
(a) all of the rights, privileges and powers of each of the
business entities that have merged or consolidated, and all property,
real, personal and mixed, and all debts due to any of those business
entities and all other things and causes of action belonging to each
of those business entities shall be vested in the Surviving Business
Entity and after the merger or consolidation shall be the property of
the Surviving Business Entity to the extent they were of each
constituent business entity;
(b) the title to any real property vested by deed or otherwise in
any of those constituent business entities shall not revert and is not
in any way impaired because of the merger or consolidation;
(c) all rights of creditors and all liens on or security
interests in property of any of those constituent business entities
shall be preserved unimpaired; and
(d) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
15.5.2. A merger or consolidation effected pursuant to this Article
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
ARTICLE 16
GENERAL PROVISIONS
16.1. Addresses and Notices. The address of the General Partner for all
purposes shall be the address set forth on the books and records of the
Partnership and for each Limited Partner the address set forth in the books and
records of the Partnership or such other address of which the General Partner
has received written notice. Any notice, demand, request or report required or
permitted to be given or made to a Partner under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
to the Partner at such address by first class mail or by other means of written
communication.
16.2. Titles and Captions. All article or section titles or captions in
this Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provisions hereof.
16.3. Pronouns and Plurals. Whenever the context may require, any pronoun
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
16.4. Further Action. The parties shall execute and deliver all documents,
provide all information and take or refrain from taking action as may be
necessary or appropriate to achieve the purpose of this Agreement.
16.5. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
16.6. Integration. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
16.7. Creditors. Except for the provisions of Section 6.2, none of the
provisions of this Agreement shall be for the benefit of or enforceable by any
creditors of the Partnership.
16.8. Waiver. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
16.9. Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the parties
notwithstanding that all the parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto, independently of the signature of any other
party.
16.10. Applicable Law. Notwithstanding the place where this Agreement may
be executed by any of the parties hereto, the parties expressly agree that all
of the terms and provisions hereof shall be construed under the substantive laws
of the State of Delaware as now adopted or as may hereafter be amended, and such
laws shall govern this Agreement, without regard to the principles of conflicts
of law.
16.11. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the 27th day of September, 1989.
GENERAL PARTNER:
KANEB PIPE LINE COMPANY
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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ORGANIZATIONAL LIMITED PARTNER:
KANEB PIPE LINE PARTNERS, L.P.
By Kaneb Pipe Line Company,
its General Partner
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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